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Corvis Stock Slips on Q3 Report

Optical switch and transport equipment maker Corvis Corp. (Nasdaq: CORV) hit the low end of expectations in announcing poor third-quarter earnings, sending its stock into an after-hours slide.

After the market closed tonight, the company reported revenues of $24.2 million for the third quarter. This is down considerably from its second-quarter revenues of $65.0 million and its first-quarter revenues of $84.1 million.

Even though analysts had lowered their expectations, the news still sent Corvis’s stock down $0.30 (14.85%) to $2.02 in after-hours trading on the Island ECN.

Pro forma net loss for the quarter was $40.3 million, or $0.11 loss per share, excluding goodwill and other intangible assets, amortization expense, and equity-based expense, compared with a pro forma net loss of $32.2 million, or $0.09 per share, for the previous quarter and a pro forma net loss of $23.9 million, or $0.07 per share, for the third quarter of 2000.

Reported net loss was $80.6 million, or $0.23 per share, for the current quarter, as opposed to a reported net loss of $821.8 million, or $2.36 per share, for the second quarter, and $66.4 million, or $0.29, for the year-ago quarter.

Analysts had expected lowered revenues and adjusted their guidance. Rick Schafer, an analyst with CIBC World Markets sent out a research note on Oct. 17 reducing his revenue expectations to $25 million from his previous stated expectations of $50 million.

The company was able to reduce its cash burn rate by 46 percent to $57 million from $106 million the previous quarter. Anne Stuart, the CFO, said the company would reduce it even further in the next quarter. Most of the reductions came from previously announced layoffs and also some cuts in research and development costs. The balance sheet reported $715 million in cash and cash equivalents left at the end of the quarter.

For the fourth quarter the company expects revenues between $15 million and $35 million. The company wouldn’t give guidance for 2002 but reiterated that it would continue to reduce operating expenses and cash burn rates.

Corvis only recognized revenue from two customers this quarter. Broadwing Communications Inc. (NYSE: BRW) generated about 70 percent of the revenue while Williams Communications Group (NYSE: WCG) accounted for 30 percent. Qwest Communications International Corp. (NYSE: Q), which had sent in a large purchase order in midyear, did not generate any revenue. The carrier is completing testing of the Corvis gear and isn’t expected to certify it until late in the fourth quarter or even the first quarter of 2002.

“It is definitely not a positive to have revenue pushed out like this,” says Schafer. “But we are relatively confident that Qwest will sign on for the equipment. A lot of carriers are taking a longer time to evaluate products, and Qwest is just on the longer end.”

The company has four other customers that should also start generating revenue in the next year, Telefònica, France Telecom SA, EPIK Communications Inc., and a fourth unannounced carrier.

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com
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RadioGooGoo 12/4/2012 | 7:39:49 PM
re: Corvis Stock Slips on Q3 Report "A close examination" huh? Would you care to elaborate or do you try to get by with generalizations in life?

"Its disappoing revenues clearly indicate the future of the company. Its total valuation at this time should be no more than $100.00 million dollars or so."

Using your analogy, hell, 95% of the companies out there should "vanish from the radar screen." "Worth $100 million (or so)?" That much? Are you sure you're not being too generous?
Your "close examination" did not reveal to you that CORV has over $700 million in cash???

Hmmmm, you should get together with those CSFB guys....
Sparxe 12/4/2012 | 7:39:47 PM
re: Corvis Stock Slips on Q3 Report Harvey sez

"A close examination of Corvis would reveal that it has nothing new or outstanding technology."

Total BS, CORV already is the defacto industry standard. Nothing NEW. 400gps without regen. Most Carriers are not ready to integrate it.

Nothing outstanding? They set two provisioning records in the last quarter.

A key to making money on Tech companies is to buy them when people like Harvey tell you not too.
Thank you Harvey for keeping the price down to where we can really accumulate...

If you know where I can buy a company with patents , $713,000,000.00 in cash and their facilities all built for $100 mil.. I let you be my partner..

Harvey.... Your name is Mudd

Think
Sparxe
hey_you 12/4/2012 | 7:39:42 PM
re: Corvis Stock Slips on Q3 Report CORV has lot of cash but so does SCMR, AVCI, etc. So I think CORV may face competition from all these firms.

There has been no revenue growth and I can understand that the telecom economy is to blamed. The question which one of the above firms have been able to acquire more customers and came up with new products during this down period. I think corv has been able to do that. This shows that corv is a good gamble compared to the others.
gea 12/4/2012 | 7:39:37 PM
re: Corvis Stock Slips on Q3 Report As usual, "Harvey Mudd" makes one of his statements that proves he don't know squat about this industry. For instance...

"A close examination of Corvis would reveal that it has nothing new or outstanding technology."

This proves you miss the point. First of all, can you point to ANY company that invented some basic new technology and then placed it into a system and then became successful? Any company out there pretty much buys off the shelf, or MAYBE develops a couple of ASICs that do something kind of cool, but its not like they really invented anything fundamentally new from scratch. That's just not how commercial technology works these days. I mean, it's not like Ciena invented the optical Amplifier or even fiber bragg gratings.


As for Corvis, I'll grant that Raman amplification is not in and of itself a huge deal, though they are one of the first to implement it commercially. I'll also grant that Corvis didn't invent the concept of optical transparency.

But Corvis's strength is in the fact that they developed a well thought-out product line that solves a set of problems that may arguably exist. Even if Corvis is wrong about the market they are basically trying to create, they have at least executed in a way that is self-consistent and makes sense. That's more than most companies can say.

So Harvey, I again ask you: Since you only badmouth companies or claim conspiracy theories are everywhere, what company do YOU work for? I bet you work(ed) for something like Silk Road and so believe that everyone (like Silk Road) is out to cheat VCs and investors.


gea 12/4/2012 | 7:39:36 PM
re: Corvis Stock Slips on Q3 Report You guys convinced me, as did Harvey Mudd's stupid comments.
I just put a bid in for 1,000 Corvis.
I see it like this...
1) They've got enough cash to survive a big die-off
2) One of the few companies with a self-consistent story and execution
3) Hardware that apparently works, albeit a little weak in software
4) A new edge-box that will compete with Ciena's Core Director: some companies will buy it just so they're not a one-vendor company
5) Upside potential huge (like the risk, I admit)
6) If I'm going to lose money, let it be on something that's at least a little sexy and tackles a niche that isn't just "me too".
7) Harvey Mudd said its certain to flop, and he don't know JACK SQUAT (to quote Chris Farley's motivational speaker).
edgecore 12/4/2012 | 7:39:35 PM
re: Corvis Stock Slips on Q3 Report >As for Corvis, I'll grant that Raman >amplification is not in and of itself a huge >deal, though they are one of the first to >implement it commercially. I'll also grant that >Corvis didn't invent the concept of optical >transparency.


Can someone please define the term Optical Transparency?

Thanks

EC
gea 12/4/2012 | 7:39:34 PM
re: Corvis Stock Slips on Q3 Report Corvis recognized one thing a lot of optical network engineers have been pointing out for a while: in order to allow a network to massively scale, you've got to minimize the amount of opto-electronics in the CO. For OXCs, this means avoiding O/E/O whenever possible, and simply moving optical signals between fibers in the optical domain. With current technology, this amounts to doing careful signal power/dispersion/noise budgets and simply using a jumper (or whatever) to connect two OXC ports...no electronics whatsoever. Raman amplification gives you the power budgets to be able to afford to do cross connections like this (as well as go cross country).

Are there problems with this approach? Sure-wavelength blocking, PM, need for centralized network planning...but Corvis at least makes the case that these issues are secondary compared to the scaling issues and economics associated with EDFAs and 3R regenerators.

Hey--I don't even agree with Corvis on a bunch of issues. But they at least are well thought-out and self consistent. And if there's any environment where these are the leading issues, then Corvis is going to dominate that environment.

Let me see if my bid order went through...
poster 12/4/2012 | 7:39:33 PM
re: Corvis Stock Slips on Q3 Report gea,

a wonderful rehash of the obvious. how about providing a little insight - something beyond telling us that you are a sucker to the Corvis PR/marketing people. with all due respect, get to the real questions. do service providers really care that much about OEOs?? it would seem to me that cost is really the issue, not OEO conversions. do you think they would care about the specific technology if all other things were equal. and I find it hard to believe that PM, management capability, and visibility are secondary issues.

just my guess but all of these messages and benfits seem a come from the bubble-era of optical networking. do they really still apply?
especially since essentially all the greenfield applications are non-existent...
gea 12/4/2012 | 7:39:33 PM
re: Corvis Stock Slips on Q3 Report Poster:

Don't get me wrong...I'm not a Corvis "True Believer" in any sense of the word. I actually think most carriers will not want the problems associated with the Corivs architecture. If you are well informed in the optical networking industry, a little digging would probably allow you to find out that I myself ('GEA') have been quite an advocate of the O/E/O approach in many network environments.

BUT, as for transparency, its real importance in most networks will probably be in lowering space/power, and costs (I think protocol transparency is going to be a minor or non issue in backbone networks). The strength of Corvis is that they have at least built a product that is a) consistent with their own marketing hype (believe me, that's rarer than you think), and b)that tackles this set of network issues in a straightforward manner. Oh yeah, and c) equipment that actually seems to work from what I've heard.

If you look at my older posts on this issue, you'll see that I describe Corivs as high risk, but if it pays off it'll pay off big. Like I said before, even if I don't agree with a lot of what Corivs does, I recognize that they seem to do what they claim to do and are self-consistent. That's a hell of a lot more than the vast majority of other "next generation optical networking" companies do, so I'll toss my bread on many waters and just forget about it for a while.
edgecore 12/4/2012 | 7:39:33 PM
re: Corvis Stock Slips on Q3 Report
Interesting, my original questions about transparency was an attempt to understand the issues regarding the protection information in the SONET headers that need to be handed off from metro equipment (possibly from one vendor) off to long haul equipment (from another vendor) and vice versa.

EC

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