New Focus Dials Back
The results met lowered expectations previously announced by the company (see New Focus Slows Down), but the company's prediction of a sequential revenue decrease in the next quarter indicates that things will get worse before they get better.
The company reported revenue for the first quarter of 2001 of $40.8 million, up from $33.9 million in the fourth quarter of 2000 and $9.8 million in the first quarter of 2000. The pro forma loss of $31 million translates to a net loss of 44 cents per share, including a $28.5 million charge for the write-down of excess inventories. Not including adjustments to the results, the company's net loss for the first quarter of 2001 was $86.3 million, or $1.22 per share.
The company now expects $28 million to $32 million in revenues in the second quarter, which would represent approximately a 25 percent sequential decline from the first quarter. The company previously indicated that net revenue would decline sequentially between the first and second quarters but had not given a specific revenue number.
New Focus CEO Kenneth Westrick attributed the weakness to customer cancellations, as the industry worked down a glut of inventory in optical components resulting from a slowdown in telecom spending. Despite the slowdown, company officials expect growth to return when customers work down some of the excess inventories by the end of the year, said Westrick.
"As we get into the second half of this year, these issues will have worked their way through," said Westrick. "We're not giving specific guidance on Q2 to Q3, but we do believe the business will strengthen in the second half of this year."
New Focus executives said the company continues to invest in future products, which include a tunable laser and Raman-based amplifier components (see New Focus, New Laser), and that such products will be an important part of the company's growth.
The tunable lasers and next-generation amplification products were being sampled by customers and are expected to be shipping for revenue in the third quarter of 2000.
"After we've described these products, customers say if we deliver what we say we will, they will buy it," said Westrick. "You see a number of people active in the tunable laser market, so it's clearly a race to deliver what you say you're going to deliver. Market share will be dramatically won by those who can deliver what they say they're going to deliver."
In the quarter, the company closed two acquisitions. One was JCA, a producer of 10-Gbit/s components, and the other was Globe Y, a maker of fused fiber manufacturing equipment. Net revenue from these two acquisitions in the first quarter of 2001 totaled $10.9 million.
During the quarter, New Focus lost Corning Inc. (NYSE: GLW)as a 10 percent customer but gained Alcatel Optronics (Nasdaq: ALAO; Paris: CGO.PA), which now acounts for 15 pecent of its business. Agilent Technologies Inc. (NYSE: A) accounted for 12.8 percent of business, down from 15 percent; and Corvis Corp. (Nasdaq: CORV) accounted for 11.6 percent, down from 17.1 percent.
-- R. Scott Raynovich, Executive Editor, Light Reading http://www.lightreading.com