Sunrise Telecom reports $20.1 million sales for fourth quarter of 2004

February 11, 2005

5 Min Read

SAN JOSE, Calif. -- Sunrise Telecom Incorporated (Nasdaq: SRTI - News), a leading provider of service verification equipment for telecommunications, cable broadband and Internet networks, today reported sales for the fourth quarter of 2004 of $20.1 million, compared with $12.7 million in the third quarter of 2004 and $20.4 million in the prior year fourth quarter. Diluted GAAP net income per share was $0.02, compared with a GAAP net loss of $(0.04) per share in the third quarter and with a GAAP net income of $0.04 per share for the fourth quarter of 2003. Backlog at quarter-end was $5.3 million, compared with $5.7 million at the end of the third quarter of 2004.

Sales for the full year 2004 were $61.7 million, up 12% from $54.9 million for 2003. GAAP net loss per share for 2004 was $(0.15) compared with GAAP net loss per share of $(0.08) in 2003. Excluding amortization of acquisition-related intangible assets, stock-based compensation expense, and a one-time charge for establishing a valuation allowance on deferred tax assets, all of which are non-cash expenses, non-GAAP net income in 2004 was $0.03 per share, compared to a non-GAAP loss of $(0.02) for 2003. Refer to the "Reconciliation of Non-GAAP Adjustments" in the financial tables section of this release for a detailed presentation of the differences between GAAP and non-GAAP financial measures.

Based on Sunrise's performance in 2004, business outlook for 2005 and the company's cash position, the Board of Directors declared a dividend of 5 cents per share. The dividend will be paid on March 4th, 2005 to stockholders of record as of February 22, 2005.

Sunrise Telecom President and CEO, Paul Chang, said, "We are very pleased with this quarter's performance that was strong across all product groups. Sunrise is leveraging several major trends in the communications industry to generate growth and deliver value to our stockholders. Among these trends are the FTTx expansion cycle driving our optical business, aggressive VoIP deployments by cable operators benefiting our broadband group, and the increased migration of businesses to Ethernet which boosts carrier demand for our Ethernet testing solutions. "

The Key Achievements for the Quarter:

Major standardization win for Sunrise's modular testing platform for optical networks, STT: Sunrise has been selected by a Tier-1 North American service provider as the sole vendor for all testing needs related to the carrier's OC-192 over DWDM deployment as part of their metro expansion efforts. Sunrise is scheduled to meet an aggressive plan to deploy an STT in each major central office throughout the service provider's region.

Large contract shipment for 3G Master, Sunrise's advanced wireless protocol analyzer: During the fourth quarter, Sunrise shipped a large order of 3G Master to a Tier-1 European wireless service provider contributing to the sequential growth of protocol revenues in excess of 170%. The contract served as an important proof point for Sunrise's international expansion as well as the Company's efforts in ramping sales of its new strategic solutions. Sunrise is currently in discussions with another major wireless provider in Europe regarding a potential order for 3G Master of a similar magnitude.

New product announcement: Sunrise introduced an ADSL2+ testing module on its handheld MTT platform for access networks. The new module supports multiple deployed and emerging ADSL technologies, including the recent ITU-T ADSL2+ (G.992.5) standard targeted for the combined triple-play of voice, internet, and video services. Sunrise is currently in field trials for ADSL2+ testing with a Tier-One North American carrier and a number of international service providers.

Fourth Quarter Financial Highlights

In the fourth quarter of 2004, Sunrise Telecom recorded gross margin of 67% of sales. Gross margin was 69% of sales for both the third quarter of 2004 and the fourth quarter of 2003.

GAAP income from operations was $0.9 million in the fourth quarter of 2004, compared with GAAP loss from operations of ($2.0) million in the third quarter of 2004 and GAAP income from operations of $2.8 million in the fourth quarter of 2003.

Rick Kent Appointed CFO

The company also announced that Rick Kent was named CFO on February 8, 2005. Mr. Kent comes to Sunrise with 26 years of experience in accounting and finance. His recent professional experience includes 5 years as CFO at a publicly-traded telecom equipment provider, Cidco, that was acquired by Earthlink during his tenure. Mr. Kent also served as corporate controller at a privately held testing and measurement company, Wiltron. Said Paul Marshall, COO and former Acting CFO, "I'm pleased to have Rick on board to manage the growing reporting responsibilities we shoulder, to provide us with strategic counsel on the financial impacts of various initiatives we consider, and to help drive the company to better performance."


Added Paul Marshall, "Our first quarter is typically seasonally weak, and we expect our sales to be sequentially down, in the range of $10 to $14 million. However, we will continue to benefit from many of the positive trends that we saw in the fourth quarter as our customers vigorously pursue their strategic initiatives in the coming year. One of the key objectives of Sunrise's management is to deliver improved growth and profitability to our stockholders in 2005. Customer initiatives which we anticipate will drive us toward this result include the mobility network upgrades, the stretch to deploy voice and video over IP in cable and telecom companies, and the accelerating growth of Ethernet private line transmission and networking services provided by the telecom operators for their business customers."

Sunrise Telecom Inc.

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