Corvis Corp. (Nasdaq: CORV) third-quarter revenues dropped 94 percent from a year ago, as sales of the company's long-haul optical switches are virtually nonexistent.

The company's revenues for the quarter ended September 28 were $1.4 million, down from the $24.2 million it reported during the year-ago quarter.

Alarming? Not really. The company cited more than $500 million in cash and investments, so it has plenty of cushion.

The company currently has 883 employees, which puts its monthly revenue per employee (one metric used to measure a company's productivity) at $528.

The situation didn't appear to rattle David Huber, chairman and CEO. "In these difficult times for the telecommunications sector, Corvis continues to make progress," said Huber in the company press release.

But some investors might be asking: "What progress?" Corvis's actual net loss for the quarter was $127.4 million, or 31 cents a share, compared to a loss of $80.6 million, or 23 cents a share, for the year-ago quarter.

The company's revenues came from service contracts with Broadwing Inc. (NYSE: BRW) and France Telecom SA (NYSE: FTE).

Corvis's pro forma net loss for the quarter was $48.4 million, or 12 cents a share, versus a pro forma net loss of $40.3 million, or 11 cents a share, a year ago.

Things will get better, Corvis says. Next quarter, the company says its revenue will "increase sequentially."

Corvis again announced it would cut jobs from its French subsidiaries, affecting a total of 164 jobs out of the 200 workers there by early fiscal 2003. It expects to save $20 million annually because of the restructuring there.

The company also added two new board members: Freeman A. Hrabowski, president of the University of Maryland, and Donald R. Walker, former CEO of computer security firm Veritect. Joseph R. Hardiman, David S. Oros, and Huber are the other board members.

Corvis also announced it would buy back up to $25 million worth of its common stock, about 10 percent of the company's outstanding shares.

Bright spots in the quarter include a complete trial where Corvis successfully upgraded a transoceanic cable, using the gear it acquired from Dorsal Networks. "This is a major milestone in our subsea strategy," Huber says.

Corvis also formed a government solutions unit and announced its first government contract. Huber says the contracts Corvis has are for products, not just for government research and development purposes.

Overall, Huber says Corvis is sitting pretty, even if its earnings don't bear that out. "Our interaction with major quality carriers has never been higher," he says.

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com