FVCX Alert!!!!
Tuesday April 6, 6:04 pm Eastern Time
FVC.com sees Q1 loss, to restate Q4
SANTA CLARA, Calif., April 6 (Reuters) - Video networking company FVC.com said
Tuesday it expects to report a first quarter loss as a result of lower-than-expected revenues.
The company also said in a statement that it will restate its fourth quarter profit as a loss
because of changes in its relationship with its largest customer and revisions to an
acquisition-related charge it had taken.
FVC.com said it expects first quarter revenues will be between $8 million and $8.5 million,
resulting in a net loss per share of between $0.20 a share and $0.22 a share.
Analysts had expected the company to report a profit of $0.03 a share compared to a loss of $0.04 a share in the
year-ago quarter, according to the research firm First Call Corp.
FVC.com attributed the drop in revenues to, among other things, a significant decline in business through its major
original equipment manufacturing partner, Bay Networks, now a part of Nortel Networks (Toronto:NTL.TO - news).
Bay Networks has been FVC.com's largest customer for the last several years.
The company said negotiations during the quarter to restructure the companies' relationship resulted in a significant
reduction in joint sales activity.
Sales to Bay/Nortel fell to about 25 percent in the first quarter, compared with about 43 percent as previously reported
for the fourth quarter of 1998.
FVC.com said Nortel has indicated its intention to move from stocking inventory to having Fvc.com drop-ship to
Nortel's customers.
In order to reflect the change FVC.com will now record its sales to Nortel on a sell-through basis and has implemented
this change effective December 31, 1998.
The change reduces FVC.com's previously reported revenues for the quarter ended December 31, 1998 by about $7
million to $7.5 million to defer the revenue on inventory of FVC.com products held by Nortel on December 31, 1998.
Those revenues are now being recognized as and when such products are sold by Nortel. Sales for the fourth quarter
1998 are being revised to about $4.7 to $5.2 million; earnings per share will be revised accordingly to a net loss per
share of about $0.20 and $0.22.
''In the first quarter, our business with non-Nortel partners grew about 25 percent year-on-year,'' Chief Executive
Rich Beyer said. ''I believe that we have taken prudent financial steps to make FVC.com a much healthier organization
over the long-term, and to place the company in a much better position to scale for future growth.''
The company also said it has recomputed the in-process research and development charge for its acquisition of
ICAST. In accordance with new SEC guidelines it has reduced its estimate of the charge by $1.5 million, from $6.2
million to $4.7 million. The incremental impact will be $87,000 per quarter, bringing the total charge for goodwill and
other purchased intangibles to about $130,000 per quarter beginning the fourth quarter of 1998 and each quarter going
forward for five years.
In light of the slower than expected growth of first quarter revenues and the uncertainty of timing in some major
projects, FVC.com said it is taking a more cautious view of its near-term growth and will be lowering its internal
forecast for the year. Revenues are expected to continue to grow throughout the remainder of the year, although at a
slower pace than anticipated earlier.
Ahead of the announcement, which came after the market close, FVC.com shares had gained about 33 percent on
Tuesday, rising $4.25 to $17.38 on Nasdaq. |
