Adaptive Broadband Continues to Deliver Record Results; Q1 Revenue Up 42% Over Last Quarter and Gross Margin Doubles; Cuts Operating Loss Per Share by Two-thirds, to $.06
(BusinessWire, N/A)
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 23, 2000--
$7.9 Million Net Gain on Sale of Investments Results
in Positive Earnings Per Share of $.04
ADAPTIVE BROADBAND(TM) CORPORATION (Nasdaq:ADAP) reported today results for its fiscal year 2001 first quarter ended September 30, 2000. The company reported revenue of $24.2 million, up 42% from the $17.1 million reported for the fourth quarter of fiscal year 2000, ended June 30. Revenue for the comparable first quarter last year totaled $1.1 million, the first quarter that shipping commenced for the company's AB-Access(TM) fixed wireless broadband product. New orders booked for AB-Access(TM) totaled $30.0 million; backlog at September 30 was $72.4 million. AB-Access has generated over $1.5 billion of contracted five-year demand since inception.
For the quarter, excluding gain on investments, the company reported a net loss from continuing operations, which reflect solely the results of the AB-Access wireless broadband business, of $2.4 million, or $.06 per share, compared to a loss of $6.5 million, or $.17 per share in the June 2000 quarter. The company continues to enhance its offerings in the multiple frequencies of the product it has introduced to date -- U-NII, MMDS, 3.5 GHz and LMDS. The company's ability to close the gap from losses toward profitability was directly attributable to sustainable gross margin improvements derived from the successful introduction of its custom, cost-reducing ASIC (Application Specific Integrated Circuit) chip. Shipping of ASIC units in volume commenced in the September quarter, as scheduled, which has kept the company on track to achieve its goal of operating profitability by the March 2001 quarter.
As reported in Adaptive Broadband's fiscal year 2000 release, August 10, 2000, the company anticipated a pre-tax gain of approximately $7 to $8 million in the first quarter of 2001, realized via disposition of certain technology investments. Adaptive Broadband did record a pre-tax $7.9 million gain, or $.13 per share after tax, on the investments, which resulted in operating earnings per share of $.07 for the quarter after giving effect to $2.4 million, or $.06 per share loss from continuing operations. In July 2000, the company completed the sales of its legacy businesses and an additional $.9 million loss from discontinued operations is attributed to final closing expenses of those businesses. The earnings per share, including all operating and discontinued operations result was $.04 per share. The company has collected to date a net $120 million from the sale of the legacy businesses and investment dispositions, which increased the cash balance to $120.3 million at the end of the first quarter.
Continuing to Execute Against Plan
"We are proud of what we've accomplished since we began volume production of AB-Access just five quarters ago, when fixed wireless broadband was just a concept. This market is still in its infancy, and we believe it will remain robust for more than 10 years. We are partnering with firms with strong, global market access and distribution channels so that Adaptive Broadband can secure a significant share of this market. To date, we've partnered with Tessco, Siemens and Hitachi, which will "consumerize" AB-Access, by further size and cost reduction, for the residential market, initially in Japan. We remain confident that three more partners will be on board in the near future. A separate announcement detailing the company's new relationship with Hitachi will be released by the end of our current quarter," commented Frederick D. Lawrence, Adaptive Broadband's chairman and chief executive officer.
"As the fixed wireless broadband market evolves, we have been very responsive to the changing needs of our customers, which is an important element of our success. We offer a formidable combination of next-generation technology with attractive pricing, enabling our customers to be successful as they deploy their networks around the world. An example is our development of our MMDS product; even though the MMDS market for business applications has yet to take off in the U. S., our MMDS product is ready for first customer deployments in Latin America this quarter," stated Adaptive Broadband's president and chief operating officer, Daniel L. Scharre.
Revenue Growth Goal: Greater Than 30% Each Quarter
Adaptive Broadband is targeting a 30% or greater quarter-to-quarter revenue growth rate, according to Donna S. Birks, Adaptive Broadband's executive vice president and chief financial officer. "With over a billion and a half dollars in long-term contract commitments, some of which will ramp sooner than others, we continue to believe we can grow revenues by a healthy 30% or more each quarter. We also expect our gross margins, currently at 30%, to exceed 40% by the March 2001 quarter, when we expect to turn profitable. This goal has not changed despite the current pressures in the market. Our customer base in the U.S. is comprised primarily of aggressive emerging carriers who are advantaged by using our AB-Access product to provide reliable, multimedia wireless broadband services at competitive pricing, giving the incumbent telcos a run for their money. International sales and opportunities are growing also, and provide a significant market for all four frequency versions of our product. While we monitor closely the pressures surrounding the U.S. Competitive Local Exchange Carriers, or CLECs, we are confident that our fixed wireless broadband customers, many of which are backed solidly by investment firms and major public companies, can continue to successfully implement their business plans with our equipment. We have seen rescheduling and slowdown from a few of our customers and prospects, but we also have experienced acceleration from others. Our active customer list now exceeds 60 firms and we are counting upon that expanding diversification to weather the short-term pressures the current market environment presents."
About AB-Access
The AB-Access fixed wireless broadband platform bridges the last mile, replacing the local loop for corporate and small business subscribers. Combining a leading packet-on-demand technology and time division duplexing, it offers data transmission at rates up to 25 Mbps -- providing the capability for voice, real-time video conferencing, transmission of full streaming video, web surfing, and transmission of data files -- all simultaneously and over one connection.
About Adaptive Broadband
Adaptive Broadband (www.adaptivebroadband.com) is a data networking solutions company that is developing leading-edge technology for the deployment of broadband wireless communication over the Internet. Its AB-Access platform is a leading commercial choice for fixed broadband wireless communication. AB-Access technology spans the frequency range from 2 to 42 GHz. While the first releases for AB-Access are for applications using the 5 GHz U-NII (Unlicensed National Information Infrastructure), 2.5 GHz MMDS (Multi-channel, Multipoint Distribution Service) and 3.5 GHz (International WLL) products are also available. Additionally, Adaptive Broadband recently announced an LMDS (Local Multipoint Distribution Service) version of AB-Access. Currently being deployed at the ultra-high speed of 25 Mbps, both transmitting and receiving, product capacity is planned to increase in 2001, as requested by customers. Currently positioned as a fixed offering, portable versions of AB-Access are planned to coincide with the expanded roll-outs of wireless broadband services in 2001.
The foregoing includes forward-looking statements, such as the company's potential success in achieving profitability, that involve risks and uncertainties. Actual events or results may differ materially from those suggested by the forward-looking statement. Factors that could cause actual events or results to differ materially include, but are not limited to, fluctuations in quarterly results, delays in receipt of orders or in the shipment of products, delays in the development of telecommunications and Internet markets and delays in product enhancements. For a more detailed discussion of these and other factors, see "Risk Factors" contained in Adaptive Broadband's Annual Report on Form 10-K for the fiscal year ended June 30, 2000.
Adaptive Broadband's fiscal 2001 first-quarter conference call will be available on Monday, October 23 at 2:30 PM (PDT) at www.adaptivebroadband.com and at www.streetfusion.com. The call also will be available on Adaptive Broadband's toll-free shareholder information line, (888) 225-6789. Replays will be available on the Web sites and on the information line for one week.
ADAPTIVE BROADBAND CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)
Three Months EndedSeptember 30,-------------------2000 1999-------- -------
Revenue $ 24,209 $ 1,102
Costs of revenue 16,854 1,370------- -------
Gross margin 7,355 (268)
Expenses
Research and development 4,951 2,090
Sales, marketing and administration 7,627 4,710
Amortization of intangible assets 106 75------- -------Total expenses 12,684 6,875------- -------
Operating loss (5,329) (7,143)
Interest income (expense), net 1,612 (291)
Gain on disposal of investments 7,853 --------- -------
Income/(loss) from continuingoperations before income taxes 4,136 (7,434)
Income taxes provision/(benefit) 1,489 (2,676)------- -------
Income/(loss) from continuing operations 2,647 (4,758)
Discontinued operations
Income from discontinued operations,net of income taxes -- 895
Loss on disposal, net of income taxes (960) --------- -------(960) 895------- -------
Net Income (Loss) $ 1,687 $ (3,863)======= =======
Basic earnings (loss) per share
Income (loss) from continuing operations $ 0.07 $ (0.16)
Income (loss) from discontinued operations (0.03) 0.03------- -------
Net Income (Loss) $ 0.04 $ (0.13)======= =======
Weighted average common shares usedin computing basic earnings (loss) per share 37,597 29,439
Diluted earnings (loss) per share
Income (loss) from continuing operations $ 0.07 $ (0.16)
Income (loss) from discontinued operations (0.03) 0.03------- -------
Net Income (Loss) $ 0.04 $ (0.13)======= =======
Weighted average common shares usedin computing diluted earnings (loss) per share 39,080 29,439
ADAPTIVE BROADBAND CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands)(Unaudited)Sept. 30, June 30,2000 2000
Assets ---------- ----------
------
Current assetsCash and cash equivalents $ 120,345 $ 16,486Accounts receivable, net 27,102 16,312Inventories 4,613 14,870Deferred income taxes - current 6,693 6,839Prepaid expenses and other current assets 1,672 2,124Net current assetsof discontinued operations -- 64,259---------- ----------Total current assets 160,425 120,890---------- ----------
Property, plant and equipment, net 10,180 9,994
Deferred tax assets - non current 14,235 14,235
Intangible assets, net 2,837 2,943
Other assets 2,502 3,765
Net long-term assetsof discontinued operations -- 47,021---------- ----------$ 190,179 $ 198,848========== ==========
Liabilities and Shareholders' Equity
Current liabilitiesAccounts payable $ 7,167 $ 9,664Accrued liabilities 27,844 38,122---------- ----------Total current liabilities 35,011 47,786---------- ----------
Shareholders' equityCommon stock 3,765 3,749Capital in excess of par value 155,610 153,060Retained Deficit (4,207) (5,747)---------- ----------Total shareholders' equity 155,168 151,062---------- ----------$ 190,179 $ 198,848========== ==========
CONTACT: Adaptive Broadband
Stephanie M. Day, 408/743-3429
408/743-3482 Fax
sday@adaptivebroadband.com
Investor Information Line:
(Toll-free) 1-888-225-6789
adaptivebroadband.com
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