AVCO is in the RED! Did anyone read this before investing in this Company: (Number one rule DD)
AvTel Reports Third Quarter 1998 Results; Consecutive Quarterly Losses Reduced by 43%
Business Wire - November 10, 1998 17:19
SANTA BARBARA, Calif.--(BUSINESS WIRE)--Nov. 6, 1998--AvTel Communications, Inc. (Nasdaq:AVCO) today announced revenues of $10.6 million and a net loss of $1.2 million, or $0.13 per share on 9.5 million basic and diluted shares for the three month period ending September 30, 1998. After giving effect to the reverse acquisition of Matrix Telecom, which was closed on December 1, 1997, AvTel had revenues of $12.4 million and a net loss of $166 thousand or $0.02 per share on approximately 9.4 million basic and diluted shares for the same period of 1997.
For the nine months ended September 30, 1998, AvTel reported revenues of $34.3 million and a net loss of $5.0 million, or $0.53 per share on 9.5 million basic and diluted shares. After giving effect to the reverse acquisition of Matrix Telecom, the Company reported revenues of $39.2 million and net income of $7 thousand with a per share loss of $0.01 on approximately 9.4 million basic and diluted shares for the six months ended September 30, 1997.
The decline in gross revenues for the three month period ending September 30, 1998 over the same period last year is primarily attributable to the continued planned reduction in less profitable long distance revenue channels in the Company's wholly owned subsidiary Matrix Telecom. Revenues from these channels have decreased 41.4% or $6.3 million in 1998 compared to 1997 for the comparable nine month periods while revenues in the Company's targeted areas increased 48.9% or $4.0 million for the same period. The result of the Company's focus on higher-margin, lower churn business segments has led to an increase in gross margin as a percentage of revenue to 31.51% for the three months ended September 30, 1998 from 28.16% for the same period in 1997.
$111 thousand and $674 thousand of the Company's net loss is attributable to non-cash compensation expense resulting from the required accounting of certain compensatory stock options granted to sales agents for the three and nine month periods ending September 30, 1998 respectfully. The balance of the Company's net loss is primarily attributable to a planned increase in sales and marketing expenses associated with the expansion of its corporate data networking division, Business Markets Group.
"We continued to realize significant improvements in our overall operations, as we further develop our focus on our core business units: Business Markets Group and Consumer Markets. We have recognized significant growth in Internet access and data-networking services while developing the Company into a provider of integrated voice and data services," said Anthony E. Papa, Chairman of the Board and Chief Executive Officer.
"Business Markets Group has continued to grow, expanding our sales presence in new geographical markets nationally. We are developing new business-to-business relationships with corporations to provide advanced voice, data and Internet solutions. In this regard, we hold an advantage over many other companies that are selling carrier services. We are positioned to help our customers take advantage of new innovations in information technology while providing them with a one-stop source for all of their telecommunications needs."
"We continue to believe that Information Technology is the single most influential driver in our industry. As a result, AvTel is planning to acquire companies such as Remote Lojix, which enhance AvTel's sales and technical service presence in key data networking market segments. The planned Remote Lojix acquisition provides us with a key position in the Financial Services market, providing data networking solutions to investment banks and other financial institutions. We believe that these networking solutions will continue to drive the sale of high-volume voice and data services, including long distance telephone, Internet, Frame Relay and ATM."
"Our newly formed Addictive Media group, which includes the combination of our existing development group with the recently acquired Digital Media Inc., will allow us to increase sales capabilities of interactive media products within our Business Markets Group, and to expand our development relations with software publishing companies and other developers of interactive media.
"The Consumer Markets Group has continued its restructuring, moving away from low margin, high churn sales channels and increasing our focus on agents and resellers to small-office home-office (SOHO) customers and into ethnic markets. Our recent launch of Matrix Inet, a nationwide Internet service offering has been well received by agents and distributors. We are one of a few telecommunications companies selling a bundled, private label Internet and telephone service through distributors and resellers nationally.
"In the end, it is all about connectivity. We are bridging the gap between voice and data, bundling products that increase customer retention and the average bill per customer," continued Mr. Papa. "We believe we have made significant strides in shifting our business focus, increasing margins and maintaining a low-cost corporate infrastructure. We believe that we are positioned to take advantage of continued advancements in technology. We believe we have a well-managed company that is not encumbered by large investments in assets with ever-increasing excess capacity, and offer our customers exceptionally strong data capabilities. We continue to believe that the data/internet networking service growth will be the prime driver of our industry and that we are prepared to take advantage of these opportunities. We believe we have a strong position in the data markets, international markets and provide an increasing bundle of services. This, in conjunction with our low cost infrastructure and a strong business focus will allow us to continue our success."
AvTel Communications, Inc. is a provider of broadband network services integrating voice, data and video networking solutions for individuals and business customers. The Company markets and sells a broad range of telecommunications and advanced network services through independent value-added resellers and internal direct sales professionals. The Company targets mid-size corporations, small-office home-office professionals and select residential market segments. The Company is fully certified by the FCC and registered in all 48 contiguous states and Hawaii. In addition, the Company holds billing agreements with all the Regional Bell Operating Companies, GTE and other independent telephone companies.
All statements in this press release other than statements of historical fact are forward-looking statements that involve substantial risks and uncertainties. Reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 and to the Company's other reports filed with the Securities and Exchange Commission for a discussion of such risks and uncertainties and other factors that may have material effect on the Company's business.
AvTel Communications, Inc. and Subsidiaries
Selected Financial Information
(in thousands except for per share data)
September 30,
1998 1997(a)
Assets
Cash and cash equivalents $ 2,520 5,188
Other current assets 7,343 12,446
Total current assets 9,863 17,634
Property and equipment, net 1,564 1,316
Other assets 1,470 135
Total assets $12,897 19,085
Liabilities and Stockholders' Equity
Current liabilities 8,592 10,449
Other liabilities 724 579
Total liabilities 9,316 11,028
Stockholders' equity 3,581 8,057
Total liabilities and stockholders'
Equity $ 12,897 19,085
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997(a) 1998 1997(a)
Revenues $ 10,589 12,403 34,329 39,244
Gross
margin 3,336 3,492 9,432 11,940
Operating expenses
Selling, general and
administrative 4,298 3,725 13,683 11,623
Depreciation and
amortization 261 151 806 515
Total operating
expenses 4,559 3,876 14,489 12,138
Net operating income
(loss) (1,223) (384) (5,057) (198)
Other income (expense) including
Income taxes 14 218 63 205
Net income
(loss) $ (1,209) (166) (4,994) 7
Net income (loss) per share -- basic and
diluted $ (0.13) (0.02)(b) (0.53) (0.01)(b)
Weighted average number of common
shares 9,526,410 9,366,667(b) 9,518,132 9,366,522(b)
(a) Amounts reported as of September 30, 1997 reflect the
operations of Matrix prior to the share for share exchange with AvTel.
(b) Amounts are presented on a proforma basis as the reverse
acquisition of AvTel by Matrix did not occur until December 1, 1997.
CONTACT: Mary McCarthy, 714/914-5495 (investor relations)
mccarthy@avtel.com
or
Craig Clark, 817/788-3257 (financial relations)
cclark@avtel.com
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