UPDATE 1-Advanced Fibre first-quarter earnings fall
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PETALUMA, Calif., April 18 (Reuters) - Telecommunications
systems maker Advanced Fibre Communications Inc. said
on Wednesday its first-quarter earnings and revenues fell due
to the economic slowdown and lost business with two major
customers.
The Petaluma, Calif.-based company reported an operating
loss, before accounting changes, of $5.36 million, or 6 cents a
share, compared with a gain of $6.76 million, or 8 cents a
share, before a one-time gain, in the same period last year.
Advanced Fibre said it lost more than $10 million in
revenues related to Winstar Communications , which
filed for bankruptcy protection on Wednesday. It also lost
business with communications equipment firm Tellabs Inc.
.
Analysts had expected Advanced Fibre to report a profit in
the range of 11 cents to 13 cents, with a consensus of 12
cents, according to Thomson Financial/First Call.
Net income, including a $250 million adjustment for a
change in accounting standards, was $149.95 million, or $1.80 a
diluted share, in the first quarter, the company said. These
results also included the company's decision to reclassify its
investment in Cisco Systems and other moves.
Advanced Fibre, which makes telecom systems for local
telephone users and public phone networks worldwide, said its
revenues for the quarter ending March 31 dropped to $82.2
million from $85.4 million last year.
Advanced Fibre's stock closed up $2.14, or 14.8 percent, at
$16.59 in Nasdaq trading on Wednesday before the financial
results were released. Over the past year, it has
underperformed the Nasdaq Telecommunications Index by about 28
percent.
The company said it was unable to recognize $11.9 million
of revenues in the first quarter, about $10 million of which
was related to Winstar. Advanced Fibre said it is not likely to
be paid for products shipped in January to Winstar and thus
didn't count those sales.
Winstar, Advanced Fibre's largest customer last year, also
has filed a $10 billion lawsuit against Lucent Technologies
, which it blamed for violating a vendor financing
agreement and forcing its bankruptcy filing.
Inventory reserves associated with the loss of future
business to Winstar and Tellabs, and bad debt reserves for
shipments made to a reseller, resulted in a charge of $11.4
million.
Advanced Fibre said it would have met Wall Street's
earnings expectations for the first quarter if not for the lost
business. It said earnings, excluding the accounting changes
and the charge, would have hit $10.1 million, or 12 cents a
diluted share, while revenues would have been $94.1 million.
Advanced Fibre President and Chief Operating Officer John
Schofield said the company does not expect any further business
this year with either Winstar or Tellabs, and took an inventory
charge associated with materials and products for those two
accounts.
"Obviously we are not pleased with the results of the
quarter, and in particular, with the rapid deterioration in the
financial condition of Winstar, our largest customer in 2000,
which had a material impact on our results," he said in a
statement.
Schofield said the company is concerned about the
deteriorating economic environment. Its slowdown is not caused
by lost business to competitors, but rather pressures hurting
the telecommunications sector.
Advanced Fibre has about $874 million in cash and
securities on its balance sheet, he said.
After reporting fourth-quarter results in late January, the
company had said its first-quarter earnings would be 12 cents
per share on sales of $98 million to $102 million. That was
down from 14 cents the analysts had estimated before Advanced
Fibre warned customer spending was slowing.
REUTERS
Rtr 21:55 04-18-01 |
