Earnings Preview: Sycamore Networks
Monday May 22, 10:52 am ET
Sycamore Networks Seen Posting Fiscal 3rd-Quarter Earnings of 3 Cents Per Share
NEW YORK (AP) -- Sycamore Networks Inc., a maker of optical switches used by communications service providers, reports earnings for its fiscal third quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: In April, Chelmsford, Mass.-based Sycamore agreed to buy Eastern Research Inc., a subsidiary of musical instrument maker Allen Organ Co., for $92.5 million in cash and stock. Eastern Research makes network access products for wireline, wireless and private network operators. To complete the deal, Sycamore will also buy Allen Organ, which makes electronic keyboards.
Telecom and networking equipment heavyweight Lucent Technologies Inc., agreed in March to be bought by France's Alcatel SA for $13.4 billion. The deal is expected to close within the next year. Investors have welcomed the merger, and analysts are predicting further consolidation in among telecom equipment companies.
BY THE NUMBERS: Analysts, on average, are looking for Sycamore earnings of 3 cents per share on sales of $20.3 million, according to a poll by Thomson Financial. The estimates do not include stock options expenses.
ANALYST TAKE: "While the optical infrastructure market is strengthening, we believe that Sycamore continues to be in a difficult competitive position, both because of its relatively small size and because of its very public hiring over a year ago of Morgan Stanley to pursue strategic alternatives," wrote Credit Suisse analyst Paul Silverstein in a note to clients earlier this year. The analyst rates the company "Underperform."
"We see no change in the intermediate to long-term outlook regarding Sycamore's ability to generate meaningful, sustainable, profitable growth," he wrote.
STOCK PERFORMANCE: The stock closed at $4.70 on April 28, the last trading day of its third quarter, down 5 percent for the period. The stock closed at $4.14 on Friday. In the past 52 weeks, it has traded between $3.18 and $5.25. |
