Sycamore Slouches After Earnings
It looks that way. One analyst, in the Q&A portion of last night's quarterly conference call, actually asked executives, "How penetrated are you to that opportunity?"
Unfortunate analyst diction aside, investors today reacted with disappointment to the company's fiscal fourth-quarter 2003 earnings report, issued last night. Shares dropped $0.32 (7%) to $4.07 in midday trading today.
The lack of news about the federal project referred to as GIG-BE certainly played a part in the disappointment. Speculation that Sycamore was a leading candidate to get a piece of the project had helped fuel a recent run-up in shares (see Analysts Narrow RFP Odds).
The call itself was a bit of a snoozer, with Sycamore executives spending a lot of time on arcane financial details about cutting losses and preserving cash (there was no word on whether employees had shunned furniture to work on Yoga mats).
The company still lost money, burning some $9 million in cash in the quarter. It reported $10.9 million in revenues, compared with $8.5 million for the fourth quarter of fiscal 2002. Net loss for the fourth quarter, on a generally accepted accounting principles (GAAP) basis, was $9.7 million or $0.04 per share, compared with a net loss of $73.5 million, or $0.28 per share, a year ago.
During the conference call, analysts vainly tried to glean details of the GIG-BE project.
Sycamore executives were mum on its prospects, downplaying hopes. “I wouldn’t read into it one way or another,” said Sycamore CEO Dan Smith, when asked if Sycamore’s relatively flat R&D spending meant it wasn't preparing to land the deal.
Smith said that Sycamore built products that were ready to use for any customer, and that it could sell its existing products for any such project.
Overall, executives gave the impression of a company continuing to buckle down for a rough ride. It continues to shed jobs, ending the quarter with roughly 330 heads, down about 30 from the prior quarter. It still has a bucket of cash and investments -- $995 million, according to the last tally -- and seems intent on keeping as much of that change as possible. ”Sycamore made progress in improving its financial performance and preserving its cash,” said Smith.
Preserving cash, at least for now, seems to be a major theme at the company. And if something is going on with GIG-BE, it's not ready to talk about it.
— R. Scott Raynovich, US Editor, Light Reading