Fore Systems Inc.
Dow Jones Newswires -- April 22, 1999
FORE Sys Beats 4Q Views, Comfortable With 13c/Shr 1Q View
By Rick Jurgens
PHOENIX (Dow Jones)--FORE Systems Inc. (FORE) earnings announcement Thursday pleased company executives and analysts.
FORE's results for the quarter were "at the high end of expectations," said Paul Johnson, an analyst at BancBoston Robertson Stephens.
Excluding charges, the Warrendale, Pa., computer networking equipment and software maker posted net income of $13.9 million, or 12 cents a share, for its fourth quarter, which ended March 31. That was a penny less than its net for the like quarter a year ago but a penny more than the consensus estimate of 16 analysts surveyed by First Call Corp.
Including special charges, the company posted a fourth-quarter loss of $43.2 million, or 37 cents a share. The company took a $22.7 million charge for costs related to phase out of its PowerHub switch line. FORE also took a $34.4 million charge for compensation and restructuring related to its February acquisition of Euristix Ltd., a telecommunications software developer. That acquisition positioned FORE to provide software for data, voice and video services, according to the company.
Chief Executive Thomas Gill told Dow Jones that the company is comfortable with an analysts' consensus estimate which sees FORE posting net income of 13 cents a share for its first quarter.
Although in the past FORE has mainly been focused on the market for products used inside enterprises, Gill said that the company is catching up in the market for products used by Internet and other service providers.
In the third quarter only 10% of the switching units shipped by FORE went to service providers. But Martin Pyykkonen, analyst for CIBC Oppenheimer, said FORE had developed strong products to compete in that market.
The company's fourth-quarter sales to service providers doubled compared to a year ago, and were up 27% over the preceding quarter, Gill said.
FORE's main challenge in the service-provider market will be competition with large companies, including Lucent Technologies Inc. (LU), Cisco Systems Inc. (CSCO) and Northern Telecom Ltd. (NT), Pyykkonen said.
But the service-provider market is important because it is growing growing faster than the enterprise market, analysts say.
In its fourth quarter FORE posted 25% year-to-year growth in its enterprise products segment, and 8% growth over the previous quarter, Gill said.
- Rick Jurgens; (602) 258-2003;
richard.jurgens@cor.dowjones.com
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