Qwest Comes Through for Corvis
The optical equipment vendor reported a total of $7.1 million in revenues for its fiscal fourth quarter ended December 28, down from the $15.2 million in revenues it reported during the year-ago period (see Corvis Reports $7.1M in Q4). Corvis booked most of its quarterly revenues from previous shipments to Qwest, but it also collected from Broadwing Inc. (NYSE: BRW) and France Telecom SA (NYSE: FTE).
The original contract between Qwest and Corvis, announced in June 2000, called for Qwest to purchase $150 million of gear in two years. Nothing happened for several months until, in February 2002, Qwest cancelled the then-reduced $110 million Corvis purchase order. What it gave Corvis instead was a contract for a minimum purchase of $12 million worth of Corvis gear over two years (see Corvis's Qwest Deal Reduced by $138M).
Qwest's purchases were from Corvis's ON product family, which includes its switch that's capable of transporting light for distances over 3,200 kilometers.
Though Corvis's revenues had fallen by more than half in one year's time, the company trounced Wall Street's expectations. Analysts expected Corvis to lose 11 cents a share on revenues of only $3.9 million.
The Qwest news wasn't the only bright spot in Corvis's earnings call Thursday evening. The company also revealed that it has shipped its first boxes to its fifth customer, the U.S. government, and it expects to recognize revenue from those shipments next quarter.
"What we're seeing now more than ever is that service providers are looking to reduce their total cost of ownership... [which] is Corvis's sweet spot," said David Huber, the company's CEO and chairman.
Huber also noted that the government's current list of upgrades and build-outs amounts to about $200 million to $400 million in business that Corvis's products could address over the next two years.
The outlook on the company's Optical Convergence Switch (OCS) and subsea product lines continues to be muddy. From the technical point of view, Corvis managers say they're satisfied with both product lines, but service providers just aren't opening their pocketbooks for its OCS and undersea transmission gear. "We don't know what the timing will be on any of these [awards]," Huber says.
Corvis's pro forma net loss for its fourth quarter was $46 million, or 11 cents a share, compared to the pro forma net loss of $39.9 million, or 11 cents a share, it reported for the fourth quarter of 2001.
With one-time charges add in, Corvis actually lost $190.2 million, or 47 cents a share, during the quarter, compared to the actual net loss of $374.8 million, or $1.05 a share, it reported during the year-ago period.
Corvis's revenues for fiscal year 2002 dropped to $20.2 million from $188.5 million during the prior fiscal year.
The company's actual net loss for fiscal 2002 was $507.8 million, or $1.30 a share, compared to a net loss of $1.4 billion, or $3.94 a share, during fiscal year 2001.
Corvis ended the quarter with about 833 employees. Because of the company's announced restructuring, it expects its headcount to fall to about 500 by the end of its first fiscal quarter of 2003 (see Corvis Makes More Cuts).
The company also ended 2002 with $504.4 million in cash and investments, down from the $548.7 million in cash and investments it reported in September 2002. Corvis says it burned about $30 million in cash during the quarter and will likely spend between $30 million and $35 million next quarter because of trial activity and restructuring charges.
However, Corvis maintains it will hit its goal of $25 million in quarterly cash burn by the third quarter of fiscal 2003.
The company expects revenues for its next quarter to be down sequentially.
— Phil Harvey, Senior Editor, Light Reading