Corvis Shows Upside Surprise
In reporting its first full quarter as a revenue producing, public company, Corvis Corp. (Nasdaq: CORV) booked $22.9 million in sales for the third quarter of 2000.
These numbers blew away most observers' conservative estimates. Most analysts had expected no more than $10 million in revenue. In short, Corvis produced the "Oh my God" numbers alluded to by vice president of marketing Shyam Jha in an interview last month with Light Reading (see Corvis On Track for First Revenues).
"It was almost triple our estimates," said Conrad Leifur, analyst with U.S. Bancorp Piper Jaffray. "They got commercial shipments from Broadwing earlier than expected."
After results were posted following the market close, Corvis shares exploded in after-hours trading on the Island ECN, rising $10 to $70. Corvis had closed at $59.59, after rising 13.53 (29.38 percent) in trading during market hours.
On a pro forma basis, the net loss for the current quarter was $23.9 million, or $0.07 per share. Pro forma results for the quarter excluded goodwill and other intangible amortization expenses and equity-based expenses.
Corvis Chairman and CEO David Huber said all of the revenue was derived from field trials and commercial shipments with Broadwing Communications (NYSE: BRW). The field trial with Williams Communications Group (NYSE: WCG) is "progressing as scheduled" and is expected to convert to revenue in the fourth quarter of 2000, said Huber. The company also plans to announce additional customers in the fourth quarter.
Of course, it's too early to say that the successful conversion of one customer means Corvis deserves its $20 billion market capitalization. But the quick uptake by Broadwing, which is an investor in Corvis, was impressive. Now Corvis must convert the rest of its customers to meet the $300 million in revenue that management has projected for the year 2001.
In addition to Broadwing and Williams, Corvis has announced a contract with Qwest Communications International Corp. (NYSE:Q), which is not expected to result in revenue until the second half of next year.
Huber, in answering an analyst question about competition in the industry, exuded confidence, describing Corvis as being far ahead of the pack in developing all-optical switching technology.
"Very clearly, Corvis has set the pace and the vision for optical networking," said Huber. "All competitors have followed us and announced products. But those are just Powerpoints. in terms of Raman-based amplifier chains, Corvis is the only one shipping. The two key elements are the Raman chains and the optical switch. We see lots of announcements and shipments; we haven't heard a lot, even in terms of future dates."
-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com