Extreme Looks East

Extreme Networks Inc.'s (Nasdaq: EXTR) fourth-quarter revenues rose 25 percent from a year ago, thanks to more sales of its gear to Asia. The company said Wednesday that its fourth-quarter revenues hit $115 million, compared to $92 million during the year-ago period (see Extreme Posts Q4 Returns).

The company also returned to pro forma profitability after last quarter's heavy losses, beating Wall Street's expectations. Extreme's pro forma net income was $1.3 million, or a penny a share, for the quarter ended June 30, 2001, compared to $5.0 million, or 4 cents a share, for the year-ago period. Though its pro forma profits plunged 74 percent in just one year, Extreme's earnings were still 2 cents a share better than what Wall Street was anticipating.

Extreme's shares rebounded to $24.30 in after-hours trading on Island ECN. The company's closing stock price a year ago today was $129.31.

After adding in the effects of acquisition-related charges, restructuring costs, charges for inventory, and other miscellany, Extreme's fourth-quarter loss totaled $11.4 million, or 10 cents a share, compared with actual profits of $589,000, or a penny a share, a year ago.

Sales to Japan and Asia accounted for 36 percent of revenues for the quarter, versus 28 percent of revenues in the prior quarter.

For the first quarter of fiscal 2002, Extreme expects revenues to be "flat to slightly up," according to Extreme CFO Vito Palermo.

During the quarter, Extreme announced new deals with China Telecom and Korea Telecom (see China Telecom Gets Extreme and Extreme Wins Korea Deal). The company says it will sell 1,300 of its switches to China Telecom and an unspecified number of its BlackDiamond Ethernet switches to Korea Telecom for its asymmetric digital subscriber line (ADSL) build-out.

The company also announced during the quarter that its chief financial officer, Vito Palermo, would be leaving the company to pursue other interests (see Finance Chief Exits Extreme).

For its fiscal year 2001, Extreme reported that its net revenue increased to $491 million from $262 million for the previous fiscal year, an 88 percent jump. The company expects its revenues for fiscal 2002 to be in the $540 million to $545 million range.

Extreme cut its headcount to 970, down 9 percent from 1,067 workers in the prior quarter.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com