Agere Shines on CEO's Debut
Agere reported surprisingly good earnings -- coupled with disappointing revenues -- for its fourth quarter, which ended Sept. 30, and also announced the departure of CEO John Dickson. His replacement is Richard L. Clemmer, an Agere board member and a partner with Shelter Capital Partners. (See Agere Releases Q4 and Agere Appoints CEO.)
For its fourth quarter, Agere reported net income of $7 million, or 4 cents per share, on revenues of $416 million, compared with net income of $120 million, or 66 cents per share, on revenues of $433 million for the previous quarter. (Those third-quarter numbers were slanted by a tax windfall -- see Agere Reports Q3.)
For its fourth quarter a year ago, Agere reported net losses of $127 million, or 74 cents per share, on revenues of $439 million.
Agere's pro forma net income was 21 cents per share, blowing away analysts' estimates of 10 cents per share as tallied by Thomson Financial. What contributed to the profit surprise? On a conference call with analysts, CFO Peter Kelly listed several factors, including expense reductions; the sale of equipment from a closed Orlando, Fla., fab; and a reduction in Agere's performance-based bonuses.
As the markets were closing today, Agere was trading up $1.03 (11.7%) at $9.85.
Agere described Dickson's departure as a retirement, but it's worth noting Agere never sustained a profit under his tenure. Dickson was Agere's first CEO, appointed with the company's 2002 spinoff from Lucent.
Granted, Agere lived through some difficult years for the industry, but its stock was still considered a laggard. "I think it's underperformed the semiconductor business every single year," commented analyst Arnab Chanda of Lehman Brothers during the call.
Clemmer spoke as if Agere was starting a new phase. The company has finished most of its cost-cutting and is ready to concentrate on growth, he said: "We've taken significant steps to put ourselves in the correct cost structure going forward , so I think the real key focus for us is how we drive the top line."
Clemmer joined Agere's board in October 2002. His past experience includes stints with Texas Instruments Inc. (NYSE: TXN) and Quantum Corp. (NYSE: DSS), he noted during the call.
Agere didn't conduct an external search for a replacement, Clemmer said. "Searches for semiconductor company CEOs over the last few years have proven to be fairly prolonged, and we felt like it was a critical junction for the company where we needed to take action."
— Craig Matsumoto, Senior Editor, Light Reading