Xylan Rises 11% After 3rd-Qtr Net More Than Doubles (Update1)
Xylan Rises 11% After 3rd-Qtr Net More Than Doubles (Update1) (Adds details on overseas sales in 6th to 8th paragraphs; updates with closing stock activity.)
Calabasas, California, Oct. 15 (Bloomberg) -- Xylan Corp. rose 11 percent after the computer-networking company said third- quarter profit more than doubled, meeting forecasts, helped by strong direct sales of its powerful switches.
Xylan shares rose for a second day, climbing 1 5/16 to 13 1/4 in trading of 2.31 million. The stock has gained 24 percent since Tuesday.
Revenue surged as Calabasas, California-based Xylan sold more switches directly to large businesses, which use them to link computers to corporate networks and the Internet. Direct sales and sales made through smaller distributors increased 25 percent from the second quarter, offsetting falling sales to Alcatel SA and International Business Machines Corp. ''The 25 percent growth in direct and (smaller distributor) business during the summer months is quite impressive,'' said Marc Woodward, an analyst with Van Kasper & Co. who rates Xylan ''strong buy.''
Revenue rose 70 percent to $91.1 million from $53.5 million a year ago, while net income rose to $10.4 million, or 22 cents a share, from $4.61 million, or 10 cents. Earnings matched the 22- cent average estimate of analysts polled by First Call Corp.
Sales to Alcatel and IBM, which contributed 41 percent of total revenue in the second quarter, fell to 32 percent of revenue. Alcatel sold less Xylan products in Europe, and IBM bought less Xylan gear to reduce its swollen inventory of the products.
On a conference call with analysts late yesterday, Chief Executive Steve Kim said revenue growth will be driven by North American sales, which surged 26 percent and now contribute more than half of the company's revenue.
European sales fell 6 percent while Asian sales were little changed.
Xylan also said it repurchased about 1.5 million of its shares in the third quarter.
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