Bay Networks Reports Third Quarter Fiscal 1998 Results
04:50 p.m Apr 16, 1998 Eastern
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 16, 1998--Bay Networks
Inc. (NYSE: BAY) today reported results for its 1998 third fiscal quarter ended
March 28, 1998. The company reported revenue of $547.2 million, an increase of
6.7% from the corresponding quarter of the prior year.
Net loss for the third quarter was $(144.2) million, or $(0.66) per share; these
results include a charge of $154.0 million for in-process research and development
charges related to the acquisitions of New Oak Communications, Inc. and
Netsation Corp., both of which were completed during the third fiscal quarter.
Excluding these charges, pro-forma net income and related pro-forma diluted
income per share in the third quarter were $9.9 million and $0.04, respectively.
These results compare to pro-forma results from the quarter a year ago when Bay
Networks reported pro-forma net income (excluding $32.2 million of restructuring
charges) of $20.7 million, or $0.10 pro-forma diluted income per share.
"We are disappointed with these results. The combined effects of
weaker demand in the industry segments we serve, seasonality, and
longer customer purchase-decision cycles all had a greater negative
effect on our quarter than we anticipated," said Dave House,
chairman, CEO and president of Bay Networks.
"On a positive note, as a result of the increased priority we have placed on new
product development during the past year and a half, new products now represent a
majority of our revenue. In the third quarter, 55% of our revenue came from new
products - products that Bay Networks began shipping during the preceding 12
months. Additionally, Accelar(tm) routing switch products achieved a new record
for first-full quarter of revenue from a new product," continued House.
"We made two important acquisitions, signed an OEM and joint development
agreement and made an equity investment in NetSpeak Corporation during the third
quarter. We completed the acquisition of New Oak Communications, a leader in
Extranet Access technology that provides customers the capability to build scalable
and secure networks that utilize the Internet for private communications. We
finalized the acquisition of Netsation Corp., a privately-held leader in multi-vendor
network management. Netsation's Network Configurator(tm) tool, combined with
Bay Networks' Optivity(R) network management system, reduces the complexity
and increases the effectiveness of IP-optimized multi-device networks. We also
signed an OEM and joint development agreement with NetSpeak Corporation, a
leading developer and marketer of IP-telephony technology. The Bay
Networks/NetSpeak agreement will enable the two companies to deliver to
customers the value proposition of cost-savings for long distance voice
communications on IP, while also enabling value-added applications that combine
voice, video and data. These products and technologies broaden our product
offering to corporate enterprises and service providers," added House.
"Looking forward, we expect to achieve sequential growth in revenue from the
March quarter during the June quarter. We are confident that the revenue
contribution from the Accelar product family will increase significantly because we
will be shipping new models and have greater availability of the product line. Also,
other new products that began shipping during the month of March will contribute to
revenue for a full quarter. We will continue to aggressively control growth in
operating expenses. Although we believe the effects of weaker industry demand
and longer purchase cycles will persist in the coming months, we feel that our
enhanced product portfolio gives us a stronger position to meet these challenges,"
concluded House. About Bay Networks
Bay Networks - Where Information Flows(tm). Bay Networks, Inc. (NYSE:
BAY) is a leader in the worldwide networking market, providing a complete line of
products that serve corporate enterprises, service providers and telecommunications
carriers. The company offers frame and ATM switches, routers, shared media,
remote and Internet access solutions, IP services and network management
applications, all integrated by Bay Networks' Adaptive Networking strategy. With
headquarters in Santa Clara, California, Bay Networks markets its products and
services around the world, providing 7x24 support coverage. For additional
information visit the company's World Wide Web site at
baynetworks.com or call 800-8-BAYNET.
This release, other than historical financial information, contains forward-looking
statements that involve risks and uncertainties. These statements may differ
materially from actual future events or results. For instance, factors which could
cause results to differ from future events include the timing of customer orders, the
rate of adoption of new technologies in the data networking market, and competitive
pricing actions, among others. Readers are referred to the documents filed by Bay
Networks with the S.E.C., specifically the most recent reports on forms 10-K and
10-Q, which identify important risk factors which could cause actual results to
differ from those contained in the forward-looking statements.
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