Full press release:
Tuesday March 17, 4:17 pm Eastern Time
Company Press Release
Bay Networks Third Quarter Fiscal 1998 Results to be
Below Expectations
SANTA CLARA, Calif.--(BUSINESS WIRE)--March 17, 1998--Bay Networks Inc. (NYSE:BAY - news) today announced that, based on current information, it expects revenue and net operating income levels for its 1998 third fiscal quarter ending March 28, 1998 to be lower than
the levels recorded in the preceding quarter.
The company expects revenue for the third quarter of 1998 to be down approximately 10 percentfrom the second quarter revenue of $645 million.
This lower expectation is due to weaker than anticipated demand in many of the company's customer segments. The company believes this is the result of a number of transitions underway in its markets. Based on the expected level of sales, the company believes the gross margin in the third fiscal quarter will be below the 51.5% of revenue achieved in the second fiscal quarter. Taking these above factors into account, Bay Networks expects to be profitable, on an operating basis, in the fiscal period.
Additionally, the company expects to take a charge of approximately $154 million, or $0.67 per share on a diluted basis, for in-process research and development charges related to the acquisitions
of New Oak Communications, Inc. and Netsation Corp., both of which were completed during the third fiscal quarter.
''In recent years, revenue in the March quarter has been below the level achieved in the December quarter,'' said Dave House, chairman and chief executive officer of Bay Networks. ''We are disappointed that we did not break this historical pattern. Despite this sequential quarterly decline, we anticipate that third quarter revenue will be meaningfully higher than the $513 million recorded in the year-ago quarter.''
''As the March quarter has progressed, we are increasingly pleased with customer reception of our Accelar product line. We have been successful in placing a significant number of evaluation units in
strategically important customer sites. The product has opened new doors for Bay Networks and we believe positions us well for the future,'' continued House.
''The June quarter has been historically a strong quarter for Bay Networks,'' stated House. ''Looking forward, based on our current information, we are optimistic that we will see an increase over the December quarter revenue level even though we expect market conditions to continue to be competitive. Our outlook reflects our expectations that, for the June quarter, we will see a sequential increase in Accelar revenue and we are on track to ramp the VPN/Extranet products.
Further, we will be introducing several new products which will contribute to June quarter performance.'' |
