Avici Defiant Over HFR
Kaufman, talking during Avici's first-quarter results conference call today, said he welcomed any new core router announcements from the equipment giants, especially as the buzz around Cisco's anticipated HFR launch increases (see HFR, Where Are You?).
"When others announce product upgrades to increase reliability and scaleability, it forces the carriers to examine the choices they have, and to evaluate the wider market, and that helps our competitive position, as we've concentrated on scale and reliability from day one," trumpeted Kaufman.
That might be viewed as brave patter from a CEO with revenues of just $7 million in the first quarter, down from $7.6 million last year and from $11.5 million in the previous quarter (see Avici Reports Q1 Results and Avici Narrows Losses in Q4). The drop in revenues was expected, and was blamed on "uneven customer order patterns" (see Avici Hits Q1 Snag).
Avici did, at least, report a smaller net loss of $9 million, down from $12.7 million a year earlier, but bigger than the $3.9 million loss in the prior quarter.
Kaufman, though, is confident that things will improve, especially as its two key resellers, Huawei Technologies Co. Ltd. and Nortel Networks Corp. (NYSE/Toronto: NT), deliver more business.
The CEO expects revenues from the duo to "really kick in" during the second half of the year, following on from deals announced in the past few weeks (see Huawei Partnership Boosts Avici and SURFnet Picks Nortel, Avici, Telindus). Kaufman is particularly hopeful of further action in China to follow on from the China Telecommunications Corp. (NYSE: CHA) deal in the Guangdong province. "Guangdong is just the beginning! There's a vast set of opportunities in China, and Huawei has a lot of momentum. We're very optimistic of further deals."
Revenue from that initial Chinese contract will help revenues in the second quarter up to around $10 million, says Kaufman, and revenues for the whole of 2004 should be 20 percent to 30 percent ahead of 2003's total of $39.4 million.
That puts annual revenues in the $47.2 million to $51.1 million range, and if Avici is right about its second-quarter projection, that'll mean revenues in the second half of the year of between $30.2 million and $34.1 million, a massive leap from $17 million in the first half of the year.
The main contributors to those revenues are expected to be long-term customer AT&T Corp. (NYSE: T) as well as Huawei and Nortel, all of which are set to contribute more than 10 percent of total revenues.
Avici currently has $94 million in cash, spent just $2 million of its cash in the first quarter, and is debt-free. The vendor's share price is up by 53 cents, just over 4 percent, to $13.53, valuing Avici at $170 million.
— Ray Le Maistre, International Editor, Boardwatch