a tough day for "Screamer"......April 6, 2001
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Sycamore, Extreme Networks Warn
Of Shortfalls and Each Plans Layoffs
By WILLIAM M. BULKELEY and SCOTT THURM
Staff Reporters of THE WALL STREET JOURNAL
Sycamore Networks Inc. and Extreme Networks Inc., former highfliers in the telecommunications-equipment business, reported they will miss sales and earnings expectations and each will lay off about 12% of their work forces.
Sycamore, in Chelmsford, Mass., said it expects a net loss, excluding deferred stock-compensation costs and restructuring charges, of $38 million, or 16 cents a share, for the third quarter ending April 28. Analysts had expected the company to report net income of five cents a share, about equal to last year.
The company blamed the loss on lower-than-expected customer orders. It said it expects third-quarter revenue of $50 million to $60 million, compared with $59.2 million in the year-earlier quarter. The new figure would be barely one-third the $151 million revenue expected by analysts, according to Thomson Financial/First Call.
Sycamore said it expects to take a one-time charge of $140 million to $150 million to cover layoffs of about 140 of its 1,100 employees, and inventory and asset write-downs. In a conference call, executives said the company had geared up for strong revenue growth after telecommunications carriers last year indicated they would need more equipment than Sycamore could build. They said the slowdown in orders has come suddenly.
One of the hottest IPOs of 1999, Sycamore shares sold for as much as $199.50 in March 2000 but have since plunged 95%. The company's performance and ticker symbol, SCMR, led chat-room fans to dub it "Screamer."
In 4 p.m. Nasdaq Stock Market trading Thursday, shares rose $1.41 to $9.06 before the company announced the bad news. In after-market trading, shares were at $6.50. |
