& cplSiteName &

Tellium Stock Pops After Earnings

Light Reading
News Analysis
Light Reading
10/25/2001

Optical switch maker Tellium Inc.’s (Nasdaq: TELM) stock jumped 15 percent in early trading Thursday after the company reported better than expected third-quarter earnings for 2001 (see Tellium Ends First Public Quarter). Unlike other companies in the telecommunications and networking industry, its executives offered a positive outlook for the coming quarters.

“It was the best call this earnings season,” says Rick Schafer, an analyst with CIBC World Markets. “They dealt with the Cable and Wireless issue in the open. And their other two customers actually came in ahead of plan.”

Tellium, which had ended Wednesday day down 0.02 (0.4%) at 4.99, rebounded after the company announced its earnings. It was trading up 0.76 (15%) to 5.75 shortly after the market opened on Thursday.

The company reported net revenues of $40.1 million for the quarter, up 32 percent from $30.4 million the previous quarter. Operating losses on a pro forma cash basis were $9.9 million, compared to $15.3 million during the second quarter of 2001. Including non-cash charges, operating losses were $50.7 million during the third quarter, versus $53.8 million during the second quarter of this year.

Its net loss on a pro forma cash basis was $7.4 million, or $0.05 per share, versus $13.0 million, or $0.09 per share the previous quarter. The published expectation was a loss of $0.16 per share. Including non-cash charges, the company's net loss for the third quarter was $48.2 million, versus a net loss of $51.5 million in the second.

The company also provided guidance for the fourth quarter of 2001 as well as for all of 2002. For Q4 it expects revenues to increase 22 percent over this quarter to come in at between $44 million and $49 million. And for 2002 it expects revenues of $288 million.

Fourth-quarter projections only include revenue from two of Tellium’s three announced customers: Dynegy Inc. (NYSE: DYN) and Qwest Communications International Corp. (NYSE: Q). Dynegy, which made up the largest portion of revenue this quarter, is still expected to generate a significant amount of revenue in Q4 and throughout 2002, said Harry Carr, CEO of Tellium in a phone interview after the earnings were reported.

“We expect Dynegy to be strong every quarter in the foreseeable future,” said Carr. “They have started building out their network with plans to expand it nationally and globally.”

Carr also noted that, as a percentage, Dynegy’s contribution will decline, but the dollar amount will continue to be significant, with the provider expected to be a 10 percent customer through 2002.

Qwest generated revenue in the double digits this past quarter and is expected to continue to be significant in the following quarters, he added.

Cable and Wireless (NYSE: CWP), the other announced customer, did not produce any revenue for the company (see Ciena Wins C&W Deal). This had been foreseen, but on the call Carr told analysts that the provider would not be contributing to its Q4 revenue either, a change from earlier stated expectations.

Cable and Wireless had signed a 5-year agreement with Tellium back in September of 2000 for $350 million. While Carr asserts that no terms of the contract have changed, Cable and Wireless has publicly stated that it will not deploy Tellium switches for some time, because it doesn’t yet need them.

Carr tried to reassure analysts that more customers are on the way. He said the company will be announcing new customers by the end of the year and has included new customer wins in its forecasts. And, unlike other system companies reporting earnings this season, Carr says that customers have not pushed back equipment purchase decisions.

“Customer decisions are absolutely on track,” he insisted. “They see our value proposition. And, with pressure to reduce costs, they find it pretty compelling.”

Tellium separately announced that Dick Barcus, the company's president and chief operating officer, is retiring. Bill Proetta, who currently holds the position of vice president for product management at Tellium, will succeed Barcus (see Tellium President Retires). Barcus joined Tellium in February 1998 as vice president of marketing and product management. He was appointed president and COO in May 1999.

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

(12)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
opticalwatcher
opticalwatcher
12/4/2012 | 7:40:45 PM
re: Tellium Stock Pops After Earnings
Congrats to them. Maybe their product and concept will take hold. I do find it amusing that the title indicates a soaring stock price. Up 1.71? Its amazing how definitations change on short order. 18 months ago a soaring stock meant a 30-40 point pop. Now we're estatic to see a mere point or two.

Also, I am concerned that their projected revenues for next year are based on customers they dont have yet. Isnt this a dangerous assumption? If they dont pull in enough business to meet their projections, Harry Carr is going to be Harry Mudd in a matter of seconds. Any thoughts?
ajo2
ajo2
12/4/2012 | 7:40:44 PM
re: Tellium Stock Pops After Earnings
> I do find it amusing that the title indicates a
> soaring stock price. Up 1.71? Its amazing how
> definitations change on short order. 18 months
> ago a soaring stock meant a 30-40 point pop. Now
> we're estatic to see a mere point or two.

Are you really that dim?

I'd expect the people reading this type of web site would be educated enough to understand such simple concepts.

Here's a math lesson for you:

When a stock is $100, a $30 rise is 30%.

When a stock is $5, a $1.71 rise is 34%.

I can only hope you understand that 34% is more than 30%.

>Also, I am concerned that their projected revenues
> for next year are based on customers they dont have
>yet. Isnt this a dangerous assumption?

Do you not work for a company that sets sales goals?

The question is if all or only part of those goals should be made public. If they miss any single goal, they risk their stock price being punished.
dietaryfiber
dietaryfiber
12/4/2012 | 7:40:44 PM
re: Tellium Stock Pops After Earnings
I listened to the call.

They said that most customers would need the product later rather than sooner. I would have thought this was a red flag.

dietary fiber
dgussmann
dgussmann
12/4/2012 | 7:40:41 PM
re: Tellium Stock Pops After Earnings
This is an entirely silly post but you should really learn the difference between your and the contraction of you are. Especially when YOU'RE using it in a sentence like, "But I guess YOUR to smart to "read" what's written."
opticalwatcher
opticalwatcher
12/4/2012 | 7:40:41 PM
re: Tellium Stock Pops After Earnings
Well now, you must be a nice person to have lunch with. Or maybe you dont have time to eat lunch. I was merely being polite. Did I mention a 100 dollar stock? Did I mention percentages? No, I dont think so. I was merely pointing out the difference in the term "soaring". But I guess your to smart to "read" what's written.

With regards to your sales goal comment, sure, we have all goals. I have a goal to wash my car next weekend. I own the car and I have soap and water at the house. However, its pretty stupid to plan on washing a car if I dont actually have the car in my possession. Now, of course your sarcastic little mind is thinking up cute little statements to belittle this analogy, but try and humor me.

Companies are always making projections of sales on clients they dont have. That's been the mantra of the 90's, especially the late 90's. However, if you would "read" a little, telm isnt saying that this is their sales goals, telm is indicating that they anticipate sales to be in this range. Oh yeah, and by the way, those projections assume new clients that we dont have yet. Telm isnt selling computers, or widgets. They're selling highly specialized equipment that require long test cycles and only sell to a large group of companies worldwide. Is it smart in this economic climate to make sales projections based on customers you dont have? Or, is this question to liberal for you. Maybe we should just all accept what we're told like good little boys and girls and go on our merry way.

Finally, I was merely pointing it out as a topic of discussion. You dont have to be nasty or rude.

ajo2
ajo2
12/4/2012 | 7:40:40 PM
re: Tellium Stock Pops After Earnings
As I predicted, you completely missed the lesson. Let's spell it out: your assertion that definitions have changed is not correct. Most people would consider a 34% rise in stock price a soaring stock movement. The dollar amount has nothing to do with it. It never has.


> They're selling highly specialized equipment that
> require long test cycles and only sell to a large
> group of companies worldwide. Is it smart in this
> economic climate to make sales projections based
> on customers you dont have?

If you don't believe you can hit your sales target with the current customer base, you don't have much choice do you? They can either cut the sales projection, or they can predict winning additional customers. From the sounds of it, they didn't want to cut sales, so guess what?!

Are they being aggressive? Probably. Many times sales goals are.

> Or, is this question to liberal for you.
>
> Maybe we should just all accept what we're told like
>good little boys and girls and go on our merry way.

I don't know where all that came from, but it looks like you are doing what you accused me of doing. I never said we should blindly accept what we are told.

Oh, and if you had plans to buy a car, you'd probably also have plans to wash it. Your analogy does not work. No sarcastic statements necessary.
newguy
newguy
12/4/2012 | 7:40:24 PM
re: Tellium Stock Pops After Earnings
The article as I read it stated a $0.76 / 15% rise. Not sure where the $1.71 / 34% came from. Must agree that soaring seems a little strong for 15%.

opticalwatcher
opticalwatcher
12/4/2012 | 7:40:22 PM
re: Tellium Stock Pops After Earnings
This is an entirely silly post but you should really learn the difference between your and the contraction of you are. Especially when YOU'RE using it in a sentence like, "But I guess YOUR to smart to "read" what's written."

Yes, your right. It is a silly post.
opticalwatcher
opticalwatcher
12/4/2012 | 7:40:22 PM
re: Tellium Stock Pops After Earnings
Ok, your really annoying with your smugness. "If I planned to buy a car I would also plan to wash it"? Nice contortion of my simple point. However, your missing the point. First, if I was planning on buying a car next year it would be based on what I know I could afford. Therefore, I wouldnt be planning on buy a jag when i knew (based on current real income)that I could only afford a chevy. Furthermore, in this economic climate, what in god's name would make me stick my neck out and make such aggressive projections as to double my revenue's when 1) our biggest cash cow (dynegy) will be slowing orders, 2) there has no word of new customers OR new trials, and 3) the telecom sector as a whole is still finding bottom while capex spending continues to shrink into 2002.

About the trials issue, we all know how long the trial period takes. Since no new trial customers have been announced, what makes you think that any new customers will be on board in the near term and start to contribute to earnings?

Hmm....I'm thinking that your annoyed with my statements not because they dont make sense, or express a point of view that merely disagree's with your vision. I think that you have an interest. Such as being part of the telm team in charge of shutting down little emails like mine, or, a financial position of some sort who thinks that these boards actually influence the stock price in some way. Which is it?
ajo2
ajo2
12/4/2012 | 7:40:20 PM
re: Tellium Stock Pops After Earnings
Interesting. Now that you've learned the lesson about what a soaring stock price really is, you've completely dropped the original subject and have taken to trying to prove completely unrelated points.

> what makes you think that any new customers will
> be on board in the near term and start to
> contribute to earnings?

And once again you are doing something you accused me of. I never said I thought they could find new customers. However, I implied that THEY must think it is possible, otherwise they most likely wouldn't have said it.

>I think that you have an interest. Such as being part
> of the telm team in charge of shutting down little
> emails like mine, or, a financial position of some
> sort who thinks that these boards actually influence
> the stock price in some way. Which is it?

You're wrong yet again - you just can't win for losing! I don't even know what Tellum makes, much less give a flip about their spin on PR or disagreeing with their vision, whatever it happens to be.

As for these boards, I come here for comedy relief. The rumor mill is second to none and has me rolling on the floor often. I agree with you that anyone that thinks stock prices reflect anything said here needs serious help.
Page 1 / 2   >   >>
Featured Video
Upcoming Live Events
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events
Partner Perspectives - content from our sponsors
Sports Venues: Where 5G Brings a Truly Immersive Experience
By Peter Linder, 5G Evangelist, North America, Ericsson
Multiband Microwave Provides High Capacity & High Reliability for 5G Transport
By Don Frey, Principal Analyst, Transport & Routing, Ovum
All Partner Perspectives