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Optical/IP

Tellium Finds Some Revenue

Tellium Inc. (Nasdaq: TELM) managed a slight uptick in revenue, according to its 2003 first-quarter earnings report, released yesterday after the market closed.

Revenues were $10.1 million during the first quarter of 2003, compared with $2.9 million in the fourth quarter of 2002. The company also reduced its losses. On a U.S. GAAP basis, it reported a net loss of $37.4 million, or a loss of $0.38 per diluted share. Last quarter the company reported a net loss of $56.5 million, or a loss of $0.57 per diluted share.

The company burned through about $13.8 million during the quarter, ending with about $157.2 million in cash. This was $1.2 million less than the $15.0 million cash burn that the company had projected in its earnings call on January 29, 2003.

During the company’s conference call, chairman and CEO Harry Carr was positive about the company’s future.

“It looks like we have turned the corner in terms of revenues,” he told investors and analysts.

Michael Losch, the company’s CFO, says he expects to see similar results in the coming quarter.

On the surface, the news looks okay. But digging deeper, Tellium’s good fortune could be fleeting. Carr revealed during the conference call that Cable & Wireless (NYSE: CWP) had been the company’s only 10 percent customer for the quarter. The revenue came in as part of the amended purchase contract with the carrier that was renegotiated at the end of last year. Instead of buying $350 million worth of gear, the company is now only required to purchase a fraction of that in the first two quarters of 2003 (see C&W, Tellium Rework Contract).

While Carr says the company hopes to do more business with Cable & Wireless beyond its required purchase contract, no guidance was given for the third and fourth quarters. Carr also wouldn’t state exactly how much Cable & Wireless spent with the company, citing the carrier’s request to keep that information under wraps for competitive reasons. But he did admit that Cable & Wireless had contributed a “significant portion” of Q1 revenues.

He tried to downplay the company’s reliance on a single customer for the lion’s share of its revenue in the first quarter, saying the company is engaged in conversations with 360networks Inc., which has bought long haul network assets from Dynegy Inc. (NYSE: DYN). While Dynegy had once been a strong customer of Tellium’s, its sales had fallen off as it neared completion of its networks.

Despite the newfound revenue, some investors may not be convinced that the company will continue on its upward path. Tellium, like many other tech companies in the current environment, has a lot of cash, yet is still losing money. There are grumblings that certain investors could be positioning themselves to take a bigger stake in the company in order to force its officers to look for a buyer or liquidate its assets, such as what has happened at CoSine Communications Inc. (Nasdaq: COSN) (see Mellon Pressures CoSine for Sale).

— Marguerite Reardon, Senior Editor, Light Reading

opticalphaggot 12/5/2012 | 12:08:06 AM
re: Tellium Finds Some Revenue But then you are implying that they must act in like with their fudiciary responsibilities of just shutting down the dying piece of crap. The other option would be to line your own pockets with shareholder money. I wonder which option I would choose if I could get away with it. =)
snapdragon 12/5/2012 | 12:08:06 AM
re: Tellium Finds Some Revenue I hear that Tellium management is busy paying themselves huge bonuses (and the employees somewhat smaller ones) while steadily burning through their cash with no light in sight at the end of this really dark tunnel.

My feeling is that Carr & co. have given up on turning the company around (if they ever thought it possible) and are trying to make the most of the situation till the company is dead.

The best thing that could happen to shareholders would be to liquidate the company and disburse the remaining cash but of course its in Carr's interest to prevent that and instead milk the company for all its worth.
opticalwatcher 12/5/2012 | 12:08:01 AM
re: Tellium Finds Some Revenue Does anyone know if carr and company found a way out from paying back their option loans?
opticalwatcher 12/5/2012 | 12:08:01 AM
re: Tellium Finds Some Revenue Holy moly, will Carr ever give it a break? Turning what corner? The corner right before the edge of the cliff? This guy kills me. Two years ago he swore by his 270 million 2002 year. This year he's trying to tell us about how they are turning the corner. All the while, their only paying customer is about to end their relationship. And 360 networks won't need more long haul. The best telm could hope for from those guys is a service contract. Big deal. That won't feed the fat cats at telm.

By the way, anyone notice the pop in price a day or so ahead of earnings? I'll bet that was an insider ploy trying to sucker in some stupid buyers. Wow, are these guys stuck in the bubble era or what????!!!!!! Wake up boys, the real world has come back. The days of free lunches are over. Time to work for your money again.
shaggy 12/5/2012 | 12:07:56 AM
re: Tellium Finds Some Revenue Does anyone know if carr and company found a way out from paying back their option loans?

=============================

Yeah, keep giving yourself bonuses 'til the cash runs out, then walk away.....
opticalwatcher 12/5/2012 | 12:07:49 AM
re: Tellium Finds Some Revenue Thx. Figures. Rich people keep getting richer while everyone else gets laid off. F-U Carr!!! I hope you get yours some day.
bo knows optics 12/5/2012 | 12:07:49 AM
re: Tellium Finds Some Revenue Loans were forgiven. $5 million in bonuses too.

http://www.app.com/app2001/sto...
BobbyMax 12/5/2012 | 12:07:24 AM
re: Tellium Finds Some Revenue Optica Core Switches are not much in demand in the long haul and ultra long haul optical networks. This situation was known to Tellium for the last two years. But the comany did not do anythig worthwhile to improve its situatiom. The company stayed in the news for one reason or the other.

The company must follow the example of CoSine Communications to dispose off its assets.
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