Optical/IP Networks

Net.com Plugs Along

Network Equipment Technologies Inc. (net.com) (NYSE: NWK) kept plugging along with its core government business during its third fiscal quarter of 2004, boosting revenue 6 percent from the prior quarter.

The company, which makes services switches and VOIP gear, reported revenue of $33.6 million, a 6 percent increase from $31.9 million it reported in its second fiscal quarter of fiscal 2004. For the third quarter the company reported a net profit of $909,000, or $0.04 per share. The company reported net income of $400,000, or $0.02 per share in the second quarter.

Revenues still remain below the $34 million in revenue the company reported in the first quarter of 2004 (see Net.com Hits Rough Road). Still, investors applauded the news. Network Equipment's stock traded up $0.44 (3.27%) to $13.90 in after-hours trading following the earnings announcement.

Most analysts on the company conference call focused their questions on potential future business. Net.com executives described an increase in RFP and bidding activity but would not specifically comment on the size of new deals they expect to get in 2004.

“In North America we are seeing more activity and there is not just one RBOC out there, but there are several looking to rearchitect their network,” said Bert Whyte, company CEO. “But it’s difficult to know when they’ll start turning those RFPs and RFIs into new business.”

The company cited a number of new government projects contributing to revenue, including a $4.5 million order from the U.S. Army KICC (Kuwait-Iraq Command, Control, Communications, and Computers Commercialization) project and a contract from the NATO communications network that includes Network Equipment’s Promina, SCREAMlink, and SCREAM gear for ISDN voice, routing, and data transport (see Net.com Signs with NATO, Cisco).

— R. Scott Raynovich, US Editor, Light Reading

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