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Financial

Sycamore Hits Lowered Target

Sycamore Networks Inc. (Nasdaq: SCMR) today reported that its revenues for its first quarter of fiscal 2002 were down 82 percent from a year ago and 58 percent sequentially, as it continues to reposition itself to sell to incumbent carriers. The optical equipment company reported revenues of $21.2 million for the period that ended October 27, 2001 (see Sycamore Reports on Q1).

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
http://www.lightreading.com
edgecore 12/4/2012 | 7:34:43 PM
re: Sycamore Hits Lowered Target Thanks,

With respect to Optical Switches and the control plane (CP) of these boxes. What is the main job of a CP in an optical switch (for an opaque switch and then for an all optical one).

What protocols do the CP's run...I guess GMPLS in an all optical puppy, but what else...is control plane the right term, should I be saying signalling?

EC
edgecore 12/4/2012 | 7:34:43 PM
re: Sycamore Hits Lowered Target Thanks,

With respect to Optical Switches and the control plane (CP) of these boxes. What is the main job of a CP in an optical switch (for an opaque switch and then for an all optical one).

What protocols do the CP's run...I guess GMPLS in an all optical puppy, but what else...is control plane the right term, should I be saying signalling?

EC
manoflalambda 12/4/2012 | 7:34:44 PM
re: Sycamore Hits Lowered Target FWIW you can LU as well (Bandwidth Manager, LambdaUnite and eventually LambdaManager).

Salute,
Manoflalambda
tet109 12/4/2012 | 7:34:45 PM
re: Sycamore Hits Lowered Target From bunsiness side SCMR has been in trouble since day one. All Williams employees that chose SCMR to get rich took money and quit now Williams not buy product. They never really have customer. Product not to good but many people become rich. To bad for people who not become rich. SCMR might not be in business for long probably.

-Tet
trixie 12/4/2012 | 7:34:45 PM
re: Sycamore Hits Lowered Target SCMR has a groomer, introduced at Supercomm this year- it was a bit late, purportedly due to ASIC delays- allowing Ciena to run unbridled in the market, hence their lead position in market share.

Tellium's Aurora is an OC-48 groomer, that is, it can switch only OC-48's as its smallest traffic granularity.

So, those with Grooming:


CIEN
SCMR
NT
CORV- claims to have capability
TELM- OC-48 only

This list is incomplete, so save the flames until I get some coffee....

The Optical packet switch companies could, in theory, groom at STS-1 levels, using a single (or a couple) STS-1 frames/burst, provided they have desiged in HW and SW to do so.
edgecore 12/4/2012 | 7:34:46 PM
re: Sycamore Hits Lowered Target
Does SCMR have a grooming switch?

Who in the industry has a grooming switch? Ciena, Tellium...soon the HDX....can someone attempt to build a list...should be short enough!

Thanks

EC

HarveyMudd 12/4/2012 | 7:34:48 PM
re: Sycamore Hits Lowered Target During its hey days, the executives of Sycamore Network got incredibly reach because their propioganda about their products.

There are many companies selling the same product that Sycamore does.
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