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Sycamore Lowers Outlook, Boom

CHELMSFORD, Mass. -- Sycamore Networks, Inc. (NASDAQ: SCMR) announced today that its financial results for the fiscal first quarter ending October 27, 2001, will be lower than previously anticipated due to the continued deceleration of spending in the telecommunications sector. Sycamore currently anticipates that fiscal first quarter revenue will be in the range of $20 to $25 million. Based on current business conditions, the Company is implementing a restructuring of its operations. In the first quarter, Sycamore expects to record restructuring and other charges in the range of $200 to $210 million. These charges comprise the following: · A $100 to $105 million charge associated with excess inventory and purchase commitments;
· A $7 to $8 million charge related to workforce reductions of approximately 240 employees; and
· A $93 to $97 million charge for consolidation of facilities and the write-down of certain impaired assets as well as certain strategic equity investments. The Company expects to report a pro forma net loss for the fiscal first quarter, which excludes amortization of deferred stock compensation, payroll taxes on stock option exercises, restructuring and other charges, in the range of $40 million, or $(0.16) per share, to $44 million, or $(0.18) per share. “The downturn in capital spending in the telecommunications sector continues to impact Sycamore’s business,” stated Dan Smith, Sycamore’s president and chief executive officer. “Without clear signs of a turnaround in customer spending, Sycamore is taking action to reduce expenses and resize the business for this new economic environment. We made a difficult but necessary decision to reduce our workforce and we are in the process of transitioning the individuals impacted by our business decision. We remain focused on providing resources to critical technology initiatives and sales and support services so that we may capitalize on opportunities as market conditions improve.” Sycamore Networks Inc.
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