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Earnings reports

Corvis Posts $1.4M Quarter

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
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Belzebutt 12/4/2012 | 9:28:49 PM
re: Corvis Posts $1.4M Quarter check NT's (or LU's) balance sheet, and figure out how long they'll last without a turnaround. Now who was it that was dead?


NT and LU are both aiming to break-even without a turnaround. NT has the cash to do that, most analysts agree. What you're saying is that CORV hopes for a turnaround to get through this? Just sit on their hands for 3.5 years and not sell anything? Great business plan!

I might refer you to some recent Nortel LH wins by the way... LH is not quite "dead" for everyone, but it clearly is totally dead for Corvis.

Most analysts still agree Corvis has the best tech

I'd like to see an analyst that says Corvis ULH and optical gear is better than Innovance... I doubt there's a single one out there who's tinkered with both, and we know Innovance gear is much newer...
marionetteworks 12/4/2012 | 9:28:48 PM
re: Corvis Posts $1.4M Quarter How close to "real" is the Innovance gear? As for "Best Tech", I don't think that's the issue here...both Raman and ULH have been around for a long time, and in the ULH case even commerically. Corvis' strength was basically in "packaging" Raman and "all optical" architectures: they pointed to what they thought would drive trafic patterns to ULH+Optical, and then built a product around it, that works (by all accounts).

As for Innovance, well, I'm wondering just what they could do in this space that would be sigifiantly different. It's not like they employ all-optical wavelength converters (do they?).



I think Innovace can make all the claims about having trials just like Corvis. The difference is they're still chasing their first customer in a MUCH harsher environement than when Corivs was around, and they don't have the benefit of giving away loads of stock options to get that first couple of contracts (not to mention that could be viewed as unethical today).

Not sure if they have all-optical wavelength converters, but they seem to be the company that has the closest product to Corvis. The comparison is certainly more valid than comparing CORV to NT or LU! And usually more recent gear avoids design issues from old gear and takes advantage of new tech, so since we don't know much about either technology I find it more likely that the more recent stuff performs better (but it's speculation of course).
gea 12/4/2012 | 9:28:48 PM
re: Corvis Posts $1.4M Quarter <<<most agree="" analysts="" best="" corvis="" has="" still="" tech<br="" the="">
I'd like to see an analyst that says Corvis ULH and optical gear is better than Innovance... I doubt there's a single one out there who's tinkered with both, and we know Innovance gear is much newer...>>>

How close to "real" is the Innovance gear? As for "Best Tech", I don't think that's the issue here...both Raman and ULH have been around for a long time, and in the ULH case even commerically. Corvis' strength was basically in "packaging" Raman and "all optical" architectures: they pointed to what they thought would drive trafic patterns to ULH+Optical, and then built a product around it, that works (by all accounts).

As for Innovance, well, I'm wondering just what they could do in this space that would be sigifiantly different. It's not like they employ all-optical wavelength converters (do they?). In addition, they may end up being late to the ULH game, if there ever IS a ULH game (and I think that's the big question here).

As for comparing Corvis to Lucent/Nortel, etc...,remember that Lucent will have about $10 Billion in sales this year, and is an embedded part of many big/old/RBOC networks, so they have something to turn around. Corvis is still pretty close to zero in sales and doesn't have any significant traction anywhere.

My point isn't to dog Corvis here, just to point out that any optimisim must be done in the face of this being a BIG longshot.

As you (Dave7777) said before, Corvis is a niche player. And it's niche-hood is exactly what scares most investors away, and that's a sensible response. Me, "hard fast rules"...I'm sinking $$$ into Corvis PRECISELY because its a niche and a long shot. They've got a crazy captain at the helm who seems to have a do-or-die attitude, and I like that. But I don't criticize those who say it's a losing proposition.
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Reindeer 12/4/2012 | 9:28:48 PM
re: Corvis Posts $1.4M Quarter 'nuff said.
flanker 12/4/2012 | 9:28:47 PM
re: Corvis Posts $1.4M Quarter Most analysts still agree Corvis has the best tech, and they have the cash to wait this out.

For transport, I'd say Ceyba is better.

madtech 12/4/2012 | 9:28:46 PM
re: Corvis Posts $1.4M Quarter Interesting to think Innovance will sell into a market that all concede doesn't exist without having anything depolyed and in the same breath talk of Corvis only having deployed to people who have vested interest. Bottom line, it is deployed. Second assumption is that what Corvis is currently involved in trials with is the same gear as is deployed? Surely you believe they are all just sitting around writing ECN's on the current equipment. Interesting.
deer_in_the_light 12/4/2012 | 9:28:46 PM
re: Corvis Posts $1.4M Quarter AT&T will decide who the winner will be ! Be patient for another couple of months and we will know. Corvis, Lucent, NEC, Ciena have the best chances. It will be very difficult for Innovance or Ceyba to break through unless they have support from a large established supplier.
Belzebutt 12/4/2012 | 9:28:46 PM
re: Corvis Posts $1.4M Quarter Second assumption is that what Corvis is currently involved in trials with is the same gear as is deployed? Surely you believe they are all just sitting around writing ECN's on the current equipment. Interesting.

Not necessarily, but I would guess they're using a similar architecture to the old stuff or try to stay compatible in some way, which is usually a limitation. Starting from scratch allows you to "do it right".
madtech 12/4/2012 | 9:28:45 PM
re: Corvis Posts $1.4M Quarter Well, the first cut was made expressly to use existing technologies, which is what the market wanted to be comfortable with. It was done, and it worked. Taking things to 10 gig and higher removes those limitations since those components didn't exist. A 2.5 gig platform will not resemble much in a 10 gig or higher platform.
whyiswhy 12/4/2012 | 9:28:43 PM
re: Corvis Posts $1.4M Quarter With zero sales and 900+ peoples lives on the line, Huber should have:

1) Expanded the product line to include things other than LH gear,
2) Cut back on head count when sales did not meet plan, and
3) Bought another company better positioned to make sales in this market.

LH will take one more year to move off zero...

-Whyiswhy
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