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Earnings Roundup
of internetnews.com [January 25, 2002] |
 |
As expected, officials at Sun Microsystems, Inc. (NASDAQ:SUNW), didn't have good numbers to report to investors at their second quarter 2002 conference call, announcing a net loss of $431 million and a slight climb in revenues.
Investors and analysts are well aware of Sun's problems, mainly because the network computing company gave Wall Street a foreshadowing of times to come with their first quarter 2002 report, which blamed the Sept. 11 events and a shaky environment for computer purchases.
Michael Lehman, Sun executive vice president of corporate resources and chief financial officer, said, all things considered, this second quarter is much better than the first.
"Compared with Sun's first fiscal quarter, bookings and revenue in the second fiscal quarter are up sequentially and inventory reductions are in excess of $200 million," he said. "We generated cash in the quarter on an operating basis, even with the payments we've made on our restructuring, and Sun's cash and liquid marketable investment position remains strong at approximately $6 billion."
Revenues of $5.9 billion for the first six months of fiscal 2002 point to decreased spending, a 41 percent drop from 2001. Still, despite the overall loss, $3.1 billion of that revenue came in the second quarter, showing a slight nine percent increase over the first quarter of 2001.
"We are showing signs of progress. Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company," Lehman said.
Murray Hill, N.J.-based Lucent Technologies Inc. (NYSE:LU) thinks its revenue bottomed out in fiscal first quarter 2002 and said it expects revenue to rebound in the second quarter.
"We continue to believe that revenues in the first fiscal quarter of 2002 represented the low point for Lucent sales in the current market downturn," said Frank D'Amelio, executive vice president and chief financial officer. "For the second fiscal quarter, on a sequential basis, we expect our top line to improve approximately 10 percent to 15 percent and our bottom line to improve at an even greater rate."
Net loss for the quarter, which ended Dec. 31, was $423 million, about 14 cents per diluted share. In the same period a year ago, the company reported a $464 million loss, or about 14 cents a diluted share. On a pro forma basis, the company lost 23 cents a share, compared to a pro forma loss of 42 cents a share in the same quarter last year. Analysts were anticipating a pro forma loss of 24 cents a share from the first quarter.
Meanwhile, the company, which spent 2001 navigating a slew of difficulties, said it has made "significant progress" in phase two of its restructuring plan, which aims to make it profitable again in 2002.
Among the achievements the company has trumpeted since entering phase two in August of last year are:
- It has reduced its expense run rate by $1.6 billion, on top of the $2 billion reduction it achieved in phase one; the company's phase two goal is to reduce the expense run rate by $2 billion;
- It says it is on track to reduce its annual capital spending rate to $750 million, on top of the $700 million reduction it attained in phase one;
- It reduced working capital by $400 million more than the $3 billion it achieved in phase one; its phase two goal is to reduce working capital by $1 billion in fiscal 2002;
- It reduced its headcount by an additional 15,000 from the previous quarter through a combination of force reductions, outsourcing of some manufacturing operations, divestitures of businesses and attrition; the company's goal in phase two is to bring its remaining workforce of 62,000 (excluding Agere), down by another 15,000 to 20,000 positions.
Looking ahead, Lucent plans several new product introductions in 2002.
In the mobility solutions space, the company will introduce SuperHLR, a solution which authenticates, manages and profiles Internet addresses and other subscriber information for mobile users. Lucent is making an aggressive play in the 3G mobile infrastructure space. In the first quarter, it completed CDMA 1X voice and data calls in China with China Unicom, and a CDMA2000 1X wireless data call in the Dominican Republic with Centennial Dominicana. It also began shipping the Flexent OneBTS base station platform, which supports both CDMA2000 and UMTS, and new elements of the MiLife portfolio of platforms and applications.
Lucent will begin rolling out its next-generation Integrated Network Solutions in the second quarter, starting with Lambda Unite, which it describes as "a cutting-edge optical system that bridges 10-gigabit and 40-gigabit traffic across both core and metro networks. Lucent plans to follow Lambda Unite with LambdaXtreme, a portfolio of optical systems that will provide both ultra-long-haul and ultra-high-capacity dense wave division multiplexing (DWDM) in one platform."
Other products planned for 2002 include the TMX880 multiservice switch and a new Lucent Softswitch signaling gateway.
As for Agere Systems Inc., which Lucent unsuccessfully tried to shop around last year, the company said it intends to spin it off as a fully independent company and accounted for the financial results of that business in the first quarter as discontinued operations.
"We intend to spin Agere using the results for the quarter ending March 31, 2002, to meet the financial covenants and conditions for the spin-off," Schacht said. "While the current market climate introduces a degree of uncertainty about the timing, we remain fully committed to spinning Agere."
Microsoft Corp. (NASDAQ:MSFT) gave analysts a pleasant surprise Thursday afternoon, beating Wall Street's earnings forecasts for the quarter that ended Dec. 31 by 6 cents a share. But—and there is a but—some have questioned whether the analysts properly adjusted their figures to account for a delay in the sale of online travel company Expedia (NASDAQ:EXPE).
The good news also came mixed with some bad. The company revised its guidance for the quarter ending March 31. It said revenue is expected to be in the range of $7.3 to $7.4 billion. Previous guidance had suggested revenue of about $7.5 billion.
The company reported earnings of 49 cents per share, beating analysts' forecasts of 43 cents per share. The company declared the quarter's revenue, $7.74 billion, a record. That's an increase of 17 percent over the $6.55 billion in revenue it reported in the same quarter last year. Operating income came in at $2.84 billion, including a $660 million charge for estimated expenses in connection with ongoing consumer class action lawsuits.
The company said it sold more than 17 million copies of Windows XP during the quarter. Microsoft claimed that made it the most successful Windows launch ever. The company also said it sold 1.5 million Xbox game consoles during the quarter, and promised greater opportunities in 2002 as it unleashes online gaming through the console. As for MSN, the company said it now has 7.7 million MSN Internet Access subscribers and more than 300,000 subscribers of other MSN premium services.
The numbers also come on the heels of the announcement of a completely new strategy for the software behemoth. According to an e-mail memo from Microsoft Chairman and Chief Software Architect Bill Gates that was leaked to the press Thursday morning, the company will now give security preference over new features in its software.
"Over the last year it has become clear that ensuring .NET is a platform for Trustworty Computing is more important than any other part of our work," Gates told Microsoft employees in the memo. "If we don't do this, people simply won't be willing—or able—to take advantage of all the other great work we do. Trustworthy Computing is the highest priority for all the work we are doing."
The issue of security has been a thorn in the company's side for years. Numerous security flaws in its Outlook e-mail client and IIS Web server software, as well as several high profile penetrations of its network, have stained the company's reputation.
"So now, when we face a choice between adding features and resolving security issues, we need to choose security," Gates said.
Struggling Canadian networking giant Nortel Networks Corp. (NYSE:NT) narrowed its fourth quarter pro-forma and net losses, as compared to the prior quarter. Company officials also said they expect a return to profitability by the end of this year.
Nortel's pro-forma loss from continuing operations in the fourth quarter was $506 million or $0.16 per common share, matching the consensus of Wall Street analysts had expected to see from the company, according to Thomson Financial/First Call. The company's net loss fell from the shocking $8.8 billion in the third quarter to $1.83 billion in this most recent quarter. In the year-ago fourth quarter, Nortel's net profit totaled $1.4 billion.
In the third quarter, Nortel's pro-forma loss hit $909 million or $0.27 per share, and in the year-ago fourth quarter, Nortel saw pro-forma net earnings of $929 million or $0.29 per common share.
Revenues from continuing operations in the quarter totaled $3.46 billion, down from this year's third quarter loss of $5.2 billion and from last year's fourth-quarter $8.2 billion.
Terry Hungle, Nortel's chief financial officer said that fourth-quarter revenues were in-line with the company's expectations while its reported bottom line results were better than expected due to gains on sales of businesses which closed late in the quarter. Nortel's cash balance thereby increased to $3.5 billion.
Compaq Computer Corp. (NYSE:CPQ) said Monday morning it now expects to post a fourth quarter profit as opposed to its previously announced guidance calling for a Q4 loss of three cents per share. The nation's number two computer manufacturer behind Dell, Compaq now expects revenue in the quarter to exceed $8 million. Previous guidance and consensus estimates for the fourth quarter were revenues of $7.6 to $7.8 billion.
The revised estimates came as welcome news for the Houston computer maker after weeks of negative stories that members of the Hewlett and Packard families plan to oppose the proposed merger of Compaq and the Hewlett-Packard Co. Despite the family opposition, Compaq chief Michael D. Capellas said shortly before Christmas that he continues to unequivocally support the deal.
Capellas said, "The merger still absolutely makes sense. We had a very clear strategy [prior to the merger], and we have taken steps to continue to execute that."
Some of those steps include huge customer wins in the past few months, including General Motors, the U.S. Postal Service, ABN-AMRO, American Express, GE Aircraft Engines, Sabre, Optus, Bank of America and Cardinal Health. Capellas indicated that further customer gains would be made public in coming weeks.
— End
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| [Jan. 16, 2002] | AT&T Sells Fixed Wireless Venture For $16 Million | |
| [Jan. 15, 2002] | Globix to Restructure Debt | |
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