Tellium Feels Alright
Company executives were feeling so good about things, they even raised revenue guidance for 2001 from a target of $104 million to a range between $125 million and $135 million.
Revenues for the second quarter of 2001 were $30.4 million, up 95 percent sequentially from Q1 revenues of $15.6 million. Gross margins before non-cash charges also increased to $12.8 million, or 42 percent of revenues, from $6.3 million, or 40 percent of revenues.
This morning, Tellium shares opened up 0.40 (2.25%) at 18.20.
The company had told investors during its road show earlier this year that it hoped to boost gross margins to between 50 percent and 55 percent within two to three years.
“We exceeded analysts’ gross margin expectations this quarter, which demonstrates we are on track to meet the long-term goals we established during our road show,” said chairman and chief executive officer Harry Carr in an interview with Light Reading after the earnings call. “If we continue to outperform we’ll exceed those goals.”
Tellium’s net loss on a pro forma cash basis during the second quarter of 2001 was $13.0 million, versus $19.8 million during the first quarter. Including non-cash charges, the company’s net loss for the second quarter was $51.5 million, versus a net loss of $49.8 million in the preceding quarter. Tellium’s net loss per share on a pro forma cash basis for Q2 was $0.09.
Tellium attributes its shiny quarter to continuing sales and deployments in two of its three named customers: Dynegy Inc. (NYSE: DYN) and Qwest Communications International Corp. (NYSE: Q). Carr said he expects deployments on the Cable and Wireless (NYSE: CWP) contract to begin in the second half of this year.
While executives on the call expressed a bullish outlook for 2001 results, they did not raise guidance for 2002. Carr explained that the increased revenue is from current customer contracts and doesn’t reflect any new customers that haven’t yet been announced.
“They’re finally gaining traction with C&W [Cable & Wireless], but not until Q4,” says Jim Jungjohann, an analyst with CIBC World Markets. “So the 2001 uptick is likely all C&W impact.” Highlights of the quarter included the company’s initial public offering in May, which raised net proceeds of $139.8 million (see Market Gives Tellium a High Five). The company also secured an agreement with Qwest to expand a multiyear strategic contract, and it entered a joint marketing and development agreement with NEC Corp. (Nasdaq: NIPNY) (see Tellium, NEC to Co-Develop). And Tellium saw the first shipments of its Aurora 128, a scaled-down version of its flagship product, the 512-port Aurora Optical Switch (see Tellium Ships Another Switch).
- Marguerite Reardon, Senior Editor, Light Reading