HSTX to report good 2Q revenue, but with an "impairment charge" ???
Quote: HSTX 5.90 +0.32
I'm not happy about this "significant" impairment charge. Not sure how badly the market will react, but we should see some reaction today & tomorrow plus additional reaction when the size of this charge is revealed. There is some slight reassurance in the final sentence of the 8K filing (below):
"The Company will not be required to make any current or future cash expenditures as a result of these impairments."
Rob
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Harris Stratex reiterates 2nd-quarter sales outlook, warns on impairment charge
Thursday January 8, 2009, 11:30 am EST
RESEARCH TRIANGLE PARK, N.C. (AP) -- Harris Stratex Networks Inc. has reiterated its fiscal second-quarter sales estimate but warned of a likely impairment charge related to one of its business units.
The wireless network equipment maker's shares jumped 42 cents, or 7.5 percent, to $6 in late morning trading Thursday.
Harris Stratex, part of Harris Corp., said late Wednesday it expects sales of $185 million to $195 million for the quarter ended Jan. 2, an increase of as much as 7.7 percent from the same quarter a year ago. Analysts, on average, expect sales of $188.8 million, according to a survey by Thomson Reuters.
The company said it expects a significant impairment charge related to the declining value of a business unit, but did not give a specific figure.
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Harris Stratex Networks Confirms Second Quarter Revenue Guidance
Company announces interim impairment testing for goodwill
Wednesday January 7, 2009, 4:35 pm EST
RESEARCH TRIANGLE PARK, N.C., Jan. 7 /PRNewswire-FirstCall/ -- Harris Stratex Networks, Inc. (Nasdaq: HSTX), a leading specialist in backhaul solutions for mobility and broadband networks, today confirmed revenue guidance for its second quarter ended January 2, 2009. The company anticipates that revenue will be between $185 million and $195 million, as provided in the company's October 29, 2008 earnings press release.
The company also announced that based on the current global economic environment and the decline in the company's market valuation, it is likely that the fair value of one or more of its reporting units has been reduced below its carrying value. As a result, the company has commenced an interim review of goodwill and other indefinite-lived assets for impairment, and expects to record a non-cash charge to write down a significant portion of these assets as of the end of the second quarter. As of September 28, 2008, the balance of goodwill and other indefinite-lived intangible assets totaled $316 million, and relates primarily to the goodwill recorded in connection with the combination of Stratex Networks, Inc. and the Microwave Communications Division of Harris Corporation.
"Our company's value proposition in mobility networks remains strong, and we see the primary growth drivers of our business as fundamentally in place," said Harald Braun, president and chief executive officer of Harris Stratex Networks. "We continue to execute our strategy and are focused on meeting the demands for wireless infrastructure build-outs and the growing need for higher-capacity IP applications."
Regular Financial Results Conference Call on February 4
Harris Stratex Networks will host a conference call on Wednesday, February 4th to discuss the company's financial results at 5:30 p.m. Eastern Time. Those wishing to join the call should dial 303-262-2137 (no pass code required) at approximately 5:20 p.m. A replay of the call will be available starting one hour after the call's completion until February 11. To access the replay, dial 303-590-3000 (pass code: 11124334 #). A live and archived webcast of the conference call will also be available via the company's Web site at www.HarrisStratex.com/investors/conference-call.
About Harris Stratex Networks, Inc.
Harris Stratex Networks, Inc. is a leading specialist in backhaul solutions for mobility and broadband networks. The company offers reliable, flexible and scalable wireless network solutions, backed by comprehensive professional services and support. Harris Stratex Networks serves all global markets, including mobile network operators, public safety agencies, private network operators, utility and transportation companies, government agencies and broadcasters. Customers in more than 135 countries depend on Harris Stratex Networks to build, expand and upgrade their voice, data and video solutions. Harris Stratex Networks is recognized around the world for innovative, best-in-class wireless networking solutions and services. For more information, visit www.HarrisStratex.com.
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Form 8-K for HARRIS STRATEX NETWORKS, INC.
7-Jan-2009
Results of Operations and Financial Condition, Financial Statements
Item 2.02. Results of Operations and Financial Condition.
On January 7, 2009, Harris Stratex Networks, Inc. ("Harris Stratex" or the "Company") issued a press release confirming revenue guidance for the second quarter ended January 2, 2009. The Company also announced it has commenced an interim review of goodwill and other indefinite-lived intangible assets for impairment, and expects to record a non-cash charge to write down a significant portion of these assets as of the end of the second quarter. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference in response to this item. In addition, the information provided in response to Item 2.06, below, is incorporated by reference in response to this item.
Item 2.06. Material Impairments.
On January 7, 2009, the Company determined that based on the current global economic environment and the decline in the Company's market valuation, it is likely that the fair value of one or more of its reporting units has been reduced below its carrying value. As a result, the Company has commenced an interim review of goodwill and other indefinite-lived intangible assets for impairment, and expects to record a non-cash charge to write down a significant portion of these assets as of the end of its fiscal quarter ended January 2, 2009. As of September 28, 2008, the balance of goodwill and other indefinite-lived intangible assets totaled $316 million, and relates primarily to the goodwill recorded in connection with the combination of Stratex Networks, Inc. and the Microwave Communications Division of Harris Corporation.
Though the goodwill impairment testing is not yet completed, it is the view of the Company's management that a significant portion of the $316 million of goodwill and other indefinite-lived intangible assets on the Company's balance sheet will be impaired as of the end of its fiscal quarter ended January 2, 2009.
As of the time of this filing, the impairment review has not been completed, and therefore the Company is unable in good faith to make a determination of an estimate of the amount or range of amounts of the impairment charge. The Company will disclose such an estimate in a future filing with the Securities and Exchange Commission. Such impairment of goodwill and other indefinite-lived intangible assets will be included in the Company's consolidated financial results as of and for the fiscal quarter ended January 2, 2009. The Company will not be required to make any current or future cash expenditures as a result of these impairments. |
