ONIS ( $28 up $36) CEO Bullish on Break-Even This Year
SAN JOSE (Reuters) - ONI Systems Corp.(NasdaqNM:ONIS - news), a maker of optical networking products for telecom companies, on Tuesday reported a better-than-expected first-quarter pro forma net loss reflecting higher revenues from the addition of five new customers.
ONI Systems said it is now in position to reach break-even earnings per share in the fourth quarter of this year.
ONI Systems Chief executive Hugh Martin told Reuters that the company will break even this year by reducing costs, adding new customers -- its customer base increased to 21 at the end of the first quarter from 16 at the end of fourth-quarter 2000 -- and as customers reorder equipment.
``Probably the largest consumer of our products will be long-distance carriers, which are trying to rapidly build metropolitan area networks,'' Martin said. ``They have to get their networks to end-users. None of that fiber infrastructure really exists today.''
Martin said he anticipates a total of 30 customers -- including long-distance and local-exchange carriers, cable television companies, Internet service providers and utility companies using right-of-ways for installing fiber optic lines as a way to expand into telecommunications -- by the end of the year.
``We added five customers in the first quarter. It really paves the way for revenue growth in following quarters because they will reorder more and more equipment throughout the rest of the year as they build out their networks,'' Martin said.
In the latest first quarter, San Jose, Calif.-based ONI Systems reported a pro forma net loss of $9.3 million, or 7 cents a share, excluding noncash charges related to stock compensation and other charges, compared with a 9 cent a share loss in the prior quarter and a 62-cent loss in the first quarter of 2000.
Analysts on average had forecast a loss of 8 cents a share for the latest first quarter ended March 31, according to First Call/Thomson Financial estimates. Estimates ranged from a loss of 8 to 9 cents.
ONI Systems said first-quarter revenues rose 50 percent to $45.1 million from the prior quarter and from the $3.6 million recorded in the first quarter of 2000.
Looking forward, the company said it expects revenue of $50 million to $60 million in the second quarter up from a prior estimate of $45 million to $55 million, while third-quarter revenue is expected to be between $60 million and $70 million.
The company also said it now expects $245 million to $255 million in revenue for 2001, up from an earlier forecast of $225 million to $235 million.
Analysts polled by First Call predict the company will post a loss of 6 cents a share for the second quarter, a loss of 2 cents for the third quarter, and a loss of 14 cents for the full year.
An after-market conference call with ONI Systems management left analysts confident that the company could meet its revenue targets and break even this year.
``ONI is really targeting the sweet spot in terms of spending by service providers: metro optics and how you increase capacity in metro areas, where the real bottleneck is,'' said Jim Parmelee, telecom equipment analyst with CS First Boston. ``It's absolutely where service providers are going to have to spend the dollars.''
Tuesday's bullish forecast by ONI Systems, based on improving revenues, was the second this year by the company.
ONI Systems in February reported an unexpectedly small loss in fourth-quarter 2000, raised its forecasts for the first and second quarters of 2001 and said it was seeing strong demand from metro-area and regional telecommunications customers.
The company, which went public in June 2000, also in February predicted it would break even on an operating basis by the end of this year.
Analysts are expecting the company to post earnings of 2 cents a share in the fourth quarter of fiscal 2001.
For the fourth quarter ended Dec. 31, 2000, ONI Systems' loss was $11 million, or 9 cents a share, on revenue of $30.2 million. That compared with $1.3 million revenues in the same quarter in 1999. ONI reported $59.7 million in revenue for the entire fiscal year 2000.
Shares of ONI Systems were at $36.50 in after-market trading after the company made its announcement Tuesday, up from a Nasdaq close in regular trading at $32.32. |
