Hmmmmmmmmmmmmmmmmm..............
Tuesday May 11, 7:18 am Eastern Time
INTERVIEW-ECI upbeat on Q2, Q3 prospects
By Tova Cohen
TEL AVIV, May 11 (Reuters) - The merger of Israel's ECI Telecom with Tadiran Telecommunications is progressing better than expected and the dilution to earnings has been less than forecast, ECI's president and chief executive said on Tuesday.
In an interview with Reuters following the release of the telecom equipment maker's first-quarter results, CEO David Rubner said he was optimistic about the second and third quarters.
ECI, which completed its merger with Tadiran in March, reported diluted earnings per share of $0.54 in the first quarter, excluding certain merger-related charges. On a pro forma basis, this compared with $0.39 a share a year earlier.
Excluding Tadiran's results, ECI earned $0.57 a share, surpassing the Wall Street consensus estimate of $0.56.
Since the merger's dilution to earnings was less than the company forecast, second and third quarter results could offer some surprises, Rubner said.
Until now, ECI had indicated the merger would be dilutive for the first two quarters of 1999 and become accretive in the third quarter.
''We might be surprised in the second quarter regarding the dilution,'' Rubner said, adding that it could be minimal or non-existent.
''We may be diluted in the second quarter but we are far more optimistic regarding the second quarter so we may have a very pleasant surprise for the third quarter.''
Rubner said synergies from the Tadiran merger were already coming into play in the second quarter.
''The merger with Tadiran is progressing much better than even we expected. Synergies are being realised, various functions are being consolidated.''
Rubner reiterated that ECI was looking for a U.S. acquisition to complement its core business in digital communications and data transmission as well as provide better access to U.S. markets.
But an acquisition was not imminent, he said.
''We are not rushing into anything, we are very carefully considering every opportunity. We are looking at many companies,'' he said.
He added that ECI would not make any acquisition that would be dilutive for more than a few quarters.
Among the companies that have been rumoured to be a target are Advanced Fibre Communications Inc (AFCI - news) and Pairgain Technologies Inc (PAIR - news).
''Many of the rumours flying around are totally baseless,'' Rubner said.
He also said that despite Asia's economic crisis, ECI's sales to the region were increasing. Asia now accounts for over 20 percent of sales, against 17 percent last year.
''We have been growing our business there and I believe the potential is tremendous and am very upbeat about what we will do in Asia in the next few quarters and years,'' he said.
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