Sycamore Hits Lowered Target
Sycamore's pro forma loss for the quarter, excluding one-time items, was $39.2 million, or 16 cents a share, compared with a pro forma net income of $15.1 million, or 5 cents a share, for the year-ago period. Those results were one cent better than Wall Street's expectations and were in line with the shortfall Sycamore announced in October.
In October, Sycamore lowered its revenue guidance from a range of $30-$40 million to $20-$25 million. At that time, Sycamore blamed the carrier spending slowdown for its lowered expectations (see Sycamore Enters Crisis Mode).
Sycamore officials predicted that revenues for its second quarter of fiscal 2002 would be flat, but they would not go so far as to suggest that its sales were stabilizing. The company is expecting revenues for next quarter to be in the $20 million to $25 million range with gross margins of 10 to 15 percent, according to Frances M. Jewels, Sycamore's chief financial officer. "I think it is safe to assume that the guidance to an essentially flat quarter is based on existing customers and backlog orders," she says.
In its first quarter, Sycamore recorded a $102.4 million charge for excess inventory; a $7.1 million charge for its 239 job cuts; and a $93 million charge for facility consolidation and the write-down of bad investments and impaired assets. Given the company's restructuring, Sycamore anticipates that it has reduced operating expenses by $12 million to $15 million a quarter.
Sycamore ended the quarter with $291.9 million in cash and cash equivalents, but with more than $1.3 billion in total assets. Given it's reduced cash burn to about $50 million a quarter, analysts say that Sycamore will definitely be around long enough to attract incumbent carrier customers.
"They're going to be losing money for the next several quarters, but they've got the cash to do that," says Rick Schafer, CIBC World Markets' optical systems analyst. "From our due diligence we see that they are around in the next-generation requests for proposals. [Carriers] are taking a look at them, but its hard to quantify when that's going to become a financial factor."
Excluding one-time items, Sycamore's actual net loss for the quarter was $247.9 million, or one dollar a share, compared to an actual net loss of $26.2 million, or 11 cents a share, for the same period last year.
During the conference call, Sycamore CEO Dan Smith announced that Ryker Young, the company's senior vice president of global sales and services, is leaving the company due to health reasons. Smith says he doesn't yet know who will replace Young.
Sycamore shares climbed $0.24 (4.8%) to 5.24 in trading Tuesday. Its share price had dropped to $5.12 as of 5:01 p.m. Eastern on Island ECN.
— Phil Harvey, Senior Editor, Light Reading