Riverstone Claims Progress
The good news is that Riverstone's breakeven point has dropped to less than $30 million in revenues per quarter from a previous estimate of $40 million. Roll out the streamers and strike up the band!
The bad news is that revenue continues to erode, which means the company can't hit the moving breakeven target. For its second quarter, which ended Aug. 27, Riverstone estimates it shipped $16.1 million in hardware, down from $18.2 million the previous quarter. For its second quarter last year, Riverstone estimated its revenues at $16.6 million. (See Riverstone Reports Q2.)
Those aren't official figures yet. Riverstone continues to offer preliminary numbers rather than full earnings statements, as the company is still awaiting audit results related to the fiscal year that ended March 2004. (See Riverstone Updates on Audit.)
On a conference call yesterday, some investors seemed frustrated with the situation, with one pointing out that CEO Oscar Rodriguez has had two years to turn things around. (See Riverstone's Got a New Chief and Riverstone Begins New Chapter.)
Rodriguez admitted the company's performance had been disappointing but contended that Riverstone is improving, adjusting its efforts to follow the likely growth sectors of the market.
"Two years ago, you didn't hear me say anything about wireless infrastructure. Two years ago, you didn't hear me say anything about the infrastructure for IMS [IP Multimedia Subsystem, technology that might enable new telecom services]. Two years ago, you didn't hear me say we need to go get an OEM deal in Russia so that we can penetrate that market more effectively. Those are things we have learned along the way," he said. (See Kazakhtelecom Picks Lucent, Riverstone and Datatel OEMs Riverstone Routers.)
As for the lower breakeven figure, that's partly due to a shift of R&D to Bangalore, India, which now houses more than 50 percent of Riverstone's engineering team. During the next six months, Riverstone plans to increase staff to more than 200 engineers from 140 today.
— Craig Matsumoto, Senior Editor, Light Reading