Openwave Net Loss Narrows, to Restructure
Analyst: OPWV hit speed bump that will derail it for several quarters - (ON24)
REDWOOD CITY, Calif. (Reuters) - Openwave Systems Inc. (Nasdaq:OPWV - news) on Monday reported a narrower net loss for its fiscal first quarter from a year ago but it warned on its second quarter and said it was restructuring the company and cutting jobs as revenues fell 19 percent sequentially.
``Openwave is realigning our operations to navigate the unprecedented uncertainty of the telecommunications market,'' said Don Listwin, chairman and chief executive of communications software provider Openwave said in a news release.
Listwin blamed the lower-than-expected results on an inability to close some transactions, modest subscriber growth and a slower than expected adoption of new technology by its customers as a result of the lagging economy.
Shares of Openwave fell more than 20 percent in after-hours Instinet trading on Monday to $7.18 from its close at $8.99 on Nasdaq. Its year-low was $6.50. The stock has underperformed Standard & Poor's 500 index by 86.3 percent over the past year.
Chief Financial Officer Alan Black told Reuters that, as part of the plan, Openwave will cut at least 300 jobs or 13 percent of its workforce by the end of the year. It currently has 2,300 employees.
Openwave aims to reduce operating expenses by at least $20 million per quarter and will begin cutting costs in its fiscal second-quarter through job cuts, by selling off excess real estate, and by consolidating offices.
It expects a related charge of about $35 million to $40 million in the fiscal second-quarter ending in December.
Redwood, California-based Openwave, which was formed by a merger of Phone.com and Software.com last November, said its fiscal first-quarter net loss, including merger and acquisition related charges and stock-based compensation, was $170.5 million, or 99 cents a share compared with $168.0 million, or $1.04 a year ago.
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Excluding the charges, it reported a pro forma net loss of $5.9 million, or 3 cents a diluted share compared with a loss of $4.9 million, or 3 cents a year ago. This was in line with its warning earlier this month but much worse than its fiscal fourth quarter pro forma profit of $19.2 million, or 11 cents a diluted share.
Analysts on average were expecting a loss of 3 cents according to Thomson Financial/First Call, with estimates ranging from a loss of 2 cents to a loss of 4 cents.
Revenues rose to $117.2 million from $80.8 million a year ago, in line with its reduced expectations of $115 million to $120 million. However, revenues fell 19 percent compared with $144.7 million in the fourth quarter.
Black said Openwave was adversely affected by its failure to close a number of mobile service deals in Europe and other customers transactions in the United States.
He blamed it partly on the distraction from the September 11 attacks. ``The forces that were affecting our performance were under way prior to that but that (the attacks) just compounded it,'' he said.
Openwave said Japan was the exception in the company's downward trend and its business in the country continues to post strong results.
Openwave expects revenues of about $100 million, plus or minus 15 percent, in the fiscal second quarter. It expects a pro forma loss of 6 cents to 19 cents in that quarter and gross profit between 83 percent and 85 percent.
The company said it expects to be profitable again by the second half of calendar year 2002 or sooner.
``While interest is still very high and our competitive position has actually improved, the timing remains less certain,'' Listwin told analysts in a conference call, adding that its business has regressed by four quarters.
``We believe that in 2002, we can get the engine going again,'' Listwin said.
This fit with J.P. Morgan wireless technology analyst Ed Snyder's outlook on next year.
``In another quarter or so this could start taking off because 2002 is going to be a much more intensive mobile data year,'' he said.
Snyder pointed out that more mobile phone makers should be introducing data-capable phones and more wireless telephone firms will be upgrading their networks to allow high-speed wireless Internet connections.
Openwave said its total active mobile subscribers grew by 4.1 million to 25.7 million in its first quarter from 21.6 million at the end of its fourth quarter.
It does not expect a significant change in subscriber growth in its fiscal second-quarter.
However, Black said Openwave would be redoubling its efforts on increasing its subscribers.
The company also plans on accelerating its plan to package together its mobile services, messaging and client services technologies in order to increase its average selling price and improve its customer base. |
