Corning Earns Off, Gives Gloomy Outlook
By Ben Klayman
CHICAGO (Reuters) - Corning Inc. (NYSE:GLW - news), the world's largest maker of fiber-optic cable, on Thursday posted a net loss including restructuring charges as demand for telecommunications services slowed, and it painted a gloomy picture for the fourth quarter.
The Corning, New York-based company posted a loss of $220 million, or 24 cents a share, compared with a profit of $254 million, or 28 cents a share, last year.
That results included the previously disclosed restructuring charge of $339 million, or $222 million after taxes. Corning has said restructuring costs will total up to $1 billion in the second half of the year.
Sales in the quarter fell 21 percent to $1.5 billion from $1.9 billion last year.
Things are not getting better either, officials warned.
``I wouldn't regard us being better than the Street (estimate) in the third quarter as a huge home run,'' Corning Chief Financial officer James Flaws told Reuters on a telephone interview. ``We're hoping (the bottom is near), but we don't know. Basically, it's difficult to forecast.''
He added the company's struggles are related to the weak economy and not a sign of lost market share.
GLOOMY OUTLOOK
Corning said fourth-quarter earnings would be hurt by the idling of its fiber manufacturing plants, and it expects to post an operating loss in the range of 20 cents to 25 cents on sales in the range of $1 billion.
Analysts had expected Corning to lose 6 cents in the fourth quarter, according to First Call. ''None of this can be surprising when you put it into context of all the problems their customers are having,'' said Robert Gensler, portfolio manager of T. Rowe Price's Media & Telecommunications Fund. ``No matter how bad they say the outlook is, it should be, quite frankly, fully anticipated.''
The company said it expects its fourth-quarter fiber volume to be less than half of last year's comparable period, with premium fiber representing about 10 percent of the company's total fiber volume.
``Hey, at least they gave us a fourth-quarter outlook. Not a lot of companies will do that right now. Better to be realistic. Under-promise and over-deliver,'' said Tim Ghriskey, senior partner with Ghriskey Capital Partners, a Greenwich, Connecticut-based investment management firm.
Corning also said it expects to experience pricing pressure in its fiber and cable businesses in the fourth quarter.
The slowdown in customer spending has hurt the entire telecom industry. Nortel Networks Corp. (NT.TO)(NYSE:NT - news) on Thursday reported shrinking sales and a huge $3.5 billion loss, saying demand for its equipment was still hard to predict.
Corning expects the cost savings resulting from its restructuring actions to be about $400 million pretax on an annualized basis. About half of that will improve the company's gross margin and the rest will reduce its operating expense.
It also said it expects 2001 capital spending of $1.7 billion to $1.8 billion -- down from $2.5 billion it projected in January. It has also reduced its 2002 capital spending plan to about $700 million.
Two weeks ago, Corning expanded its restructuring efforts, cutting 4,000 more jobs and temporarily idling numerous fiber-optic manufacturing plants due to the deteriorating business conditions.
Corning, which employed 43,000 people at its peak this year, said the job cuts by the end of the year may reach 12,000, including about 8,000 previously announced. A small number of U.S. workers will be offered voluntary early retirement packages and others may be rehired elsewhere.
The company said then it would idle most of its fiber plants later this month and resume operations next year as business improved. It also said it would cut output at its optical cable plants to match lower demand.
CUTS POSSIBLE
Corning said on Thursday it will continue to cut costs, with Flaws adding that could include further cuts to the 2002 capital spending budget as well as more job cuts. Some analysts believe the company will cut more workers as it works to lower its break-even point to match its declining revenues.
Corning said operating earnings in the third quarter, excluding one-time items, dropped to $85 million, or 9 cents a share, from $317 million, or 35 cents a share, in the same period last year.
The results topped expectations of analysts, who had expected Corning to earn 3 cents a share, with a range of 2 cents to 4 cents, according to research firm Thomson Financial/First Call.
Corning's stock in after-hours trading on Instinet rose to $8.40, from its $8.02 closing price on the New York Stock Exchange (news - web sites) ahead of the earnings announcement. Last week, it fell to a decade-low intraday trading price of $6.92.
Since the beginning of the year, the company's stock has fallen about 85 percent and underperformed its peers in the Standard & Poor's Communications Equipment (^SPCOMM - news) index by more than 55 percent.
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eBay Earns Nearly $35M, Tops Estimates in Q3
By Nora Macaluso, www.EcommerceTimes.com
Online auctioneer eBay (Nasdaq: EBAY - news) topped analyst estimates in the third quarter ended September 30th, and raised estimates for the current quarter as well.
The company on Thursday reported earnings before charges of US$34.9 million, or 12 cents per share -- topping the 11 cents expected by analysts -- along with a 71 percent increase in revenue to $194.4 million. Net income totaled $18.8 million, or 7 cents per share.
"In these extraordinary times, we continue to be impressed by the strength and resiliency of our user community," said eBay president and chief executive officer Meg Whitman. "We're continuing to see sustained growth across our U.S. and international markets, deeper penetration into many vertical categories and expanded adoption of our fixed-price trading formats."
eBay raised its forecast for fourth-quarter revenue by about $5 million, saying it now expects to generate $200 million to $210 million, even taking into account the "changing economic environment" and its "Auction for America" charity auction to benefit victims of the September 11th terrorist attacks.
However, eBay chief financial officer Rajiv Dutta said the company's guidance was tempered somewhat to reflect a weak economy, and would have been higher if economic conditions looked better.
Growth Factors
The company attributed its revenue gain to strong growth across all its business lines. In a conference call with analysts and investors, Whitman said that "these results clearly demonstrate the continued vibrancy" of the eBay business model.
Though the September 11 attacks held business back initially, buyers are returning, Whitman said. She added that while the Auction for America project is also "diverting" some goods away from the regular eBay auctions, the size of the impact is "modest."
Holiday Push
eBay executives said the company plans to promote itself as a key holiday shopping destination, with newspaper inserts, TV ads and a catalog that will be distributed in 40 offline markets.
Chief operating officer Brian Swette said the push will be "the strongest and most integrated effort ever." Through its alliance with AOL Time Warner (NYSE: AOL - news), he said, eBay will be able to use TV spots during the holiday season.
There will also be an online catalog showcasing "hard-to-find" items like hot toys that are at risk of selling out, as well as more "value-oriented" items that eBay expects will appeal to consumers strapped for cash in a weak economy, Swette said.
The overall aim, he said, is to promote eBay as a "mainstream" holiday shopping destination.
User Base Doubles
eBay said it had about 37.6 million users at quarter's end, up 99 percent from a year earlier.
The company's shares fell in after-hours trading, slipping $1.14 to $55.95. During regular market hours, investors had bid the stock higher.
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TriQuint Gets a Lift From Mobile-Phone Rebound, Beats Estimates
By Tish Williams
Senior Writer
10/18/2001 06:33 PM EDT
TriQuint Semiconductor's (TQNT:Nasdaq - news - commentary - research - analysis) third quarter got better with age.
On Sept. 18, TriQuint CEO Steve Sharp told the Street to expect a penny more than its 3 cents a share earnings estimates. Turns out the revised analyst estimates of 4 cents a share were still too low, as the communications component maker went a penny better with 5 cents a share earnings on $80.8 million in revenue. According to Multex.com, analysts were expecting $79.75 million in revenue.
Gross margins drove the earnings picture, as improvements to the Sept. 18 level of 35% to 38% took another step up to 41.5% by the end of the quarter on Sept. 30. Mobile phones performed best for TriQuint, as TDMA orders dominated shipments, followed by strong CDMA activity. Sharp said the wireless phone segment "has been the quickest to rebound of all of our businesses."
The languishing wireless base-station equipment segment did not follow suit, in keeping with the industrywide downturn. CFO Ray Link estimated that the fourth quarter would be the worst for base-station products, but warned that "there's some strength there, but it's not tremendous."
TriQuint didn't predict much improvement in the two upcoming quarters. Executives expect $75 million to $80 million in revenue in the fourth quarter and 4 cents to 5 cents a share earnings, with $70 million to $80 million in the first quarter of 2002. More than 90% of the projected fourth-quarter revenue is already ordered, while 30% of the first quarter's revenue is booked. Sharp explained that in the past year, lead times on products have been cut in half, meaning he doesn't see orders as early.
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PMC-Sierra posts 3rd-qtr loss, sets job cuts
(UPDATE: Adds details on job cuts, revenue guidance, comments from teleconference call, after-hours stock price)
SANTA CLARA, Calif., Oct 18 (Reuters) - Communications chipmaker PMC-Sierra Inc.(NasdaqNM:PMCS - news) on Thursday reported a third-quarter loss, as expected, compared with a year-earlier profit, as sales fell 69 percent.
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The company also said it would cut 24 percent of its work force and close engineering projects, part of its plan to focus on its top 17 customers going forward. It forecast falling sequential revenues, as well, in the fourth quarter.
The Santa Clara, California-based chipmaker said it had a loss before charges and expenses of $26.8 million, or 16 cents a share, compared with year-ago pro forma net income of $51.7 million, or 28 cents. Sales fell to $61.6 million from $198.2 million.
Analysts had forecast a loss of 18 cents a share, within a range of 15 cents to 20 cents, according to Thomson Financial/First Call. Sales were pegged at $63.1 million.
PMC-Sierra said it will dismiss 350 workers, beginning today, to cut costs further due to falling revenue. As of Sept. 30, the company employed 1,475 people. PMC-Sierra said it would record restructuring and other charges in the fourth quarter.
Shares of PMC-Sierra rose $1.09 cents to $16.60 on Nasdaq before results were released. The stock has fallen about 79 percent this year, in line with the decline in other communications chipmaker stocks. Shares fell to $14.92 in after-hours trade.
PMC-Sierra Inc. said it expects fourth-quarter sales of $45 million to $55 million and that inventories among its customers are coming down to acceptable levels.
PMC-Sierra's Chief Financial Officer John Sullivan told analysts in a conference call on Thursday that the low end of the revenue guidance is supported by backlog, while the higher, optimistic end of the guidance is supported by turns orders -- orders that are placed and shipped in the same quarter -- that would compose about 20 percent of overall sales.
Analysts forecast fourth-quarter sales of $64.7 million, according to Thomson Financial/First Call.
``We've seen an accelerated reduction in inventories'' among customers, said Chairman and Chief Executive Robert Bailey in a conference call, adding that there was, in the quarter, ``anecdotal evidence of spot shortages'' of certain products.
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KLA-Tencor sees 2nd-quarter profit below estimates
NEW YORK, Oct 18 (Reuters) - Semiconductor equipment maker KLA-Tencor Corp. (NasdaqNM:KLAC - news), which reported a first-quarter profit above analysts' expectations, later on Thursday said a weaker economy would bring second-quarter earnings below Wall Street consensus estimates.
San Jose, Calif.-based KLA-Tencor, whose systems are helping chip makers keep production quality up while they upgrade their factories, said it expected earnings in the second quarter ending in December of between 23 and 25 cents a share.
Analysts on average had expected a profit of 29 cents a share, according to Thomson Financial/First Call, in a range of 21 cents and 44 cents a share.
The company said it expects orders in the second quarter to be at about the same level as in the first quarter, and revenues to be $360 million to $390 million -- lower than first-quarter revenues of $503 million.
Chip equipment companies have been hit particularly hard by a drop in demand for computers and other electronics, as chip makers defer or cancel orders on new equipment.
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Conexant Q4 loss narrows on wireless sales
SAN FRANCISCO, Oct 18 (Reuters) - Microchip maker Conexant Systems Inc. (NasdaqNM:CNXT - news) on Thursday reported a narrower fourth-quarter operating loss and stabilizing revenue, crediting wireless device chip sales for the improvement.
Conexant's net loss, including special and non-cash acquisition-related charges, was $238.8 million, or 95 cents per share, more than four times the loss of $57 million, or 25 cents per share, in the quarter a year earlier.
But operating results improved from the previous quarter and Conexant said sales would rise and the loss would narrow further in the current period.
Excluding items, the Newport Beach, California-based Conexant posted an operating loss of $136.6 million, or 54 cents per share.
The compared to a pro forma profit of $43.5 million, or 18 cents per diluted share, a year ago and a loss of $220.4 million, or 89 cents per share, in the prior quarter.
Revenues for the quarter ended Sept. 30 dropped to $201 million from $561.4 million a year ago but edged up from $200.1 million in the prior quarter.
The average estimate of analysts surveyed by Thomson Financial/First Call had been for a pro forma loss of 56 cents, with a range of a loss of 55 cents to 57 cents a share.
Shares of Conexant, which was spun off from Rockwell International (NYSE:ROK - news) in 1998, initially rose in after hours trade before dropping to closed to $9.75, where the stock had closed on the Nasdaq after an 8 percent rise for the day before the announcement.
``I would say overall demand is fairly weak in everything except wireless handsets in our business,'' Chief Executive Dwight Decker said in a telephone interview.
The company forecast a 15 percent reduction in pro forma loss from the September quarter, driven by manufacturing efficiency and further cost-cutting. That roughly matched expectations on Wall Street of a 46 cent loss per share in the December quarter.
Sales would rise more than 10 percent in sales for the wireless business, driving total revenue up about 3-5 percent in the current quarter compared to the one just ended, he said.
``Inventories in wireless are normal, and the same in PCs,'' he said, but personal computer sales showed no indications of growth.
Conexant's Mindspeed business, which builds chips for high-speed optical networking equipment and the Internet, is facing an inventory glut across the board, he said.
``We don't think that is going to burn off until sometime next calendar year -- the first half of the year,'' Decker said. |
