Avanex Misses by Two Cents
Avanex Corp. (Nasdaq: AVNX) continues to swim in red ink, as the optical components maker reported wider than expected losses for its first quarter of fiscal 2002. The company reported a pro forma net loss of 11 cents a share on net revenues of $7.2 million, excluding charges for excess inventory, restructuring activities, and other items (see Avanex Reports on Q1).
The news has disappointed Wall Street analysts, who, on average, expected that Avanex would lose only 9 cents a share. Avanex's pro forma results were also much lower than its year-ago results -- when it earned 3 cents a share on net revenues of $2.3 million.
Including its assorted one-time charges, Avanex lost $21 million or 34 cents a share during the quarter. This compared to a net loss of $25.3 million or 46 cents a share for the year-ago quarter.
During the quarter, the company says, its cost cutting strategy reduced operating expenses by nearly 30 percent. The company says its balance sheet now includes more than $200 million in cash and securities.
In its most recent annual report, Avanex revealed just how serious its revenue situation had become when it noted that it has funded its operations "primarily through the sale of equity securities, bank borrowings and equipment lease financings" due to "insufficient cash generated from operations."
The company has also been in a period of restructuring for several months. Between June 30 and September 1, the company's headcount dropped from 740 to 433 employees.
Avanex says its burn rate is now around $10 million a quarter and it sees its revenue break-even point at around $22 million -- a high bar to jump, considering its most recent quarterly results.
The company gave no financial guidance for its upcoming fiscal year.
Though awash in financial worries, Avanex continues to sport an impressive roster of customers, including Fujitsu Ltd. (KLS: FUJI.KL), Nortel Networks Corp. (NYSE/Toronto: NT), and, most recently, Cisco Systems Inc. (Nasdaq: CSCO). Avanex CEO Paul Engle says its "design activity on new projects continues to be robust."
The company is also taking advantage of the economic downturn and purchasing new technology. Today it announced it intends to acquire LambdaFlex, an optical module maker with fewer than 10 employees, for an undisclosed sum.
Avanex also continues to fill its management ranks. During the quarter it announced that its CTO, Dr. Simon Cao, had been named Senior Vice President of Business Development. It also promoted Thomas LaWer to General Counsel and Dr. Giovanni Barbarossa to Vice President, Product Development.
Avanex's management corps remains a relatively new bunch. Its CEO signed on in September 2000, and six out of its ten current executive officers have joined as recently as September 1999.
Avanex shares rose $0.50 (12.2%) to $4.60 in trading on Monday.
- Phil Harvey, Senior Editor, Light Reading