Optium's Q4 Veers South
Optium Corp. (Nasdaq: OPTM) shares took a beating last night as the company announced it's going to miss fourth-quarter earnings expectations and record a loss instead of a profit.
For the three months ended July 28, Optium says its revenues were between $26 million and $26.5 million, way below the $35.9 million that analysts polled by Reuters Research had been expecting, and worse than any quarter since Optium went public in October. (See Optium Alters Q4 Forecast.)
That shortfall means Optium will report a net loss for the final quarter of fiscal 2007, but the extent of those losses aren't yet known. Analysts had been expecting profits of around $2.6 million, or 10 cents per share, excluding special items.
In initial after-hours trading Monday, Optium's stock fell $3.29 (25.2%) to $9.76, significantly below the company's all-time low of $10.90.
One key factor in the miss was a "larger than expected decline in sales of high-end 300-pin products to Optium's historical two largest telecommunications customers," yesterday's press release states. The 300-pin, 10-Gbit/s optical transceiver was Optium's original bread-and-butter product. Sales of those parts fell during Optium's third quarter, thanks to a reduced demand that the company now says was "more pronounced than expected" in the fourth quarter.
Optium also saw some delays from a new and "previously announced" customer in the cable TV area, the company adds.
Optium named no names. But candidates for those "two largest telecommunications customers" would seem to be Scientific Atlanta , now part of Cisco Systems Inc. (Nasdaq: CSCO), and Ericsson AB (Nasdaq: ERIC), through its acquisition of Marconi. Optium listed them as its two largest telecom customers for fiscal 2006.
Table 1: Optium's Biggest Fish
|Customer||% of Optium revenues,
Year ended July 2006
|% of Optium revenues,
Year ended July 2005
|Cisco/Scientific Atlanta||19.8%||(Less than 10%)|
|Ericsson/Marconi||17.3%||(Less than 10%)|
The press release notes that Optium's top four customers in fiscal 2007, each representing more than 10 percent of revenues, were Cisco/Scientific Atlanta, Ericsson/Marconi, Alcatel-Lucent (NYSE: ALU), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).
Optium probably won't provide more details until announcing earnings in mid-September.
For now, the company is characterizing its fourth-quarter miss as a matter of "timing issues" with its customers' businesses, a factor that is "abating," as the press release put it.
— Craig Matsumoto, West Coast Editor, Light Reading