Sorrento's Sitting on Good News
PLANO, Texas -- For Sorrento Networks Inc., this week has been busier than a fiddler's elbow. The company's decided to seek professional help by hiring a new president, and it also appears to be sitting on a pile of encouraging financial news.
On Thursday, just after a stock market drop in the communications sector, Sorrento announced early results for its quarter ending October 31, 2000. The company said it expects revenues for its third quarter to be in excess of $6.5 million, a jump of over 80 percent when compared to the previous quarter.
At the same time, Sorrento's parent company Osicom said it would have an analyst’s conference on Nov. 6, 2000, in San Diego; a sign that Sorrento is serious about connecting with investors, even if they haven't installed a charismatic, Wall Street wizard in the CEO slot.
And sources close to Sorrento say the company will have plenty of good news to share with analysts. One source says Sorrento's close to completing a four-year, $250 million deal to provide equipment to TeraBeam.
A representative from Sorrento wouldn't comment on deal rumors, and Terabeam didn't respond to calls by press time.
Shortly after a speech at the Opticomm conference here, Sorrento CEO Xin Cheng spoke briefly with Light Reading about Sorrento's momentous week.
To recap, Osicom Technologies Inc. (Nasdaq: FIBR) announced Tuesday that James M. Dixon had been installed as its new president and chief operating officer. Osicom will complete its combination with its Sorrento subsidiary pending a shareholder vote on Jan. 17, 2001 (see Osicom Hires New President and COO).
Cheng says he's relieved that Dixon will now be wearing a couple of his former job titles, but skeptics wonder whether Cheng will truly let Dixon guide Sorrento.
"One of my challenges has been to provide vision and strategy for Sorrento," Cheng says. "But this is teamwork, and I've been told by many that I'm overloaded.
"This is a great opportunity, not only because it relieves me of some of my burdens but because it will help us to focus on other issues."
Cheng also said that Oren G. Shaffer, the former Ameritech exec who left the Sorrento CEO post after just six months, focused too heavily on financial issues, rather than operational matters. "Jim [Dixon] is very focused on operations and on helping our customers," he says. (See Xin Cheng, Founder, Sorrento ).
Sources close to Sorrento say Schaffer left because his spending on marketing and his conversations with Wall Street underwriters without Cheng's guidance made Cheng and other Osicom managers uncomfortable.
One concern investors have with Dixon is whether, as an outsider, he'll be on a long enough leash to level with Wall Street about Sorrento's prospects. "It remains to be seen if Dixon's hire accomplishes what the company ultimately needs: an outsider with a good resume that can play a key role in the business and convince the investing public that Sorrento's worth looking at," says Paul Thieleke, an Atlanta-based branch manager for Paulson Investments. "On the surface, it looks like this is what they have done."
-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com