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Avanex Corporation Announces Fiscal 2008 Third Quarter Financial Results
FREMONT, Calif.-(Business Wire)-May 1, 2008 - Avanex Corporation (NASDAQ:AVNX), a pioneer of intelligent photonic solutions that enable next-generation optical networks, today reported its fiscal 2008 third quarter financial results for the quarter ended March 31, 2008.
Net revenue in the third quarter of fiscal year 2008 was $49.6 million, a decrease of 5 percent from $52.0 million in the second quarter of fiscal year 2008, and a decrease of 10 percent from $55.1 million for the same period last year.
Gross margin in the third quarter of fiscal year 2008 was 32 percent, an increase of 1 percentage point from 31 percent in the second quarter of fiscal year 2008, and an increase of 13 percentage points from 19 percent for the same period last year.
Net income in the third quarter of fiscal year 2008 was $3.3 million, or $0.01 per diluted share, compared with net income of $86,000, or breakeven per diluted share in the second quarter of fiscal year 2008. This compares to a net loss of $6.7 million or a net loss of $0.03 per diluted share for the same period last year.
Non-GAAP net income in the third quarter of fiscal 2008 was $2.9 million, or $0.01 per diluted share, compared with non-GAAP net income of $2.4 million or $0.01 per diluted share for the second quarter of fiscal year 2008. This compares to non-GAAP net loss of $3.0 million or a net loss of $0.01 per diluted share for the same period last year.(1)
"We were pleased with our performance this quarter. We saw significant strength in design wins illustrating the success of our new products," said Jo Major, president and chief executive officer of Avanex. "With our strong operating model, we are well positioned for profitable growth as we capitalize on our expanding market opportunities," said Major.
Q4 FY 2008 Outlook
The company expects revenue to be between $50.0 million and $53.0 million and gross margin to be between 29% and 32% in the fourth quarter of fiscal 2008, ending June 30, 2008.
Investor Conference Call
Avanex will host a conference call to discuss fiscal year 2008 third quarter results at 1:30 p.m. PST today. Investors are invited to listen to a live broadcast of the conference call via webcast, which can be accessed by visiting Avanex Investor Relations website at http://investor.avanex.com/events.cfm. Investors can also listen to the conference call by dialing 719-325-4866 and entering access ID number 6477644.
A replay of the call will be available through an archived webcast at http://investor.avanex.com/events.cfm. An audio replay will be available for one week and can be accessed by dialing 888-203-1112 and entering access ID number 6477644.
About Avanex
Avanex Corporation is a leading global provider of Intelligent Photonic Solutions(TM) to meet the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. These solutions enable or enhance optical wavelength multiplexing, dispersion compensation, switching and routing, transmission, amplification, and include network-managed subsystems. Avanex Corporation was incorporated in 1997 and is headquartered in Fremont, Calif. Avanex Corporation also maintains facilities in Horseheads, N.Y.; Melbourne, Fla.; Shanghai; Villebon Sur Yvette, France; San Donato, Italy; and Bangkok. To learn more about Avanex Corporation, visit our web site at: www.avanex.com.
Forward-looking Statements
This press release contains forward-looking statements including statements regarding expected fourth quarter of fiscal 2008 outlook and future operating results, market demand and growth trends for our products and our strategies. Actual results could differ materially from those projected in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include general economic conditions, the pace of spending in the telecommunications industry and in particular the optical networks industry, market demand and price of our products, the company's ability to sufficiently anticipate market needs and develop products and enhancements that achieve market acceptance, problems related to realizing the benefits of the divestiture in France, the company's ability to effect its restructuring goals, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, the outcome of arbitration and litigation, any slowdown or deferral of orders for products or the application of accounting or tax principles in an unanticipated manner.
Finally, please refer to the risk factors contained in the company's SEC filings including the company's Annual Report on Form 10-K filed with the SEC on Sept. 7, 2007, Quarterly Report on Form 10-Q filed with the SEC on February 1, 2008 and subsequent filings with the SEC.
Avanex assumes no obligation and does not intend to update any forward-looking statements, whether as a result of new information, future events or otherwise. -0- *T (1) Non-GAAP net income (loss) and non-GAAP net income (loss) per share exclude share-based compensation expense, amortization of intangibles, restructuring charges (recovery), gains (loss) on disposal of property and equipment, gain on sale of subsidiary, due diligence expenses related to abandoned acquisition activity and arbitration expenses. Details on the items excluded from non- GAAP net income (loss) and non-GAAP net income (loss) per share are available in the table entitled, "Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)," following the accompanying financial statements. *T -0- *T Avanex Corporation CONSOLIDATED BALANCE SHEET In thousands (Unaudited) March 31, December 31, June 30, 2008 2007 2007 —————————————————— Assets Current assets: Cash and cash equivalents $ 11,184 $ 9,284 $ 14,837 Restricted cash 3,757 6,484 3,620 Short-term investments 38,758 36,849 28,942 Accounts receivable, net 41,072 39,677 33,764 Inventories 15,624 16,915 15,188 Due from related party 61 31 14,381 Other current assets 6,680 6,372 5,716 —————————————————— Total current assets 117,136 115,612 116,448 Property and equipment, net 7,736 7,233 5,900 Intangibles, net 370 425 559 Goodwill 9,408 9,408 9,408 Other assets 2,758 2,856 2,685 —————————————————— Total assets $ 137,408 $ 135,534 $ 135,000 ==================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 30,662 $ 30,716 $ 32,549 Accrued compensation 5,499 5,796 6,091 Accrued warranty 700 771 873 Other accrued expenses and deferred revenue 7,105 9,261 10,940 Current portion of long-term obligations 10 10 9 Current portion of accrued restructuring 2,518 2,821 2,837 —————————————————— Total current liabilities 46,494 49,375 53,299 Long-term liabilities: Accrued restructuring 6,144 6,557 8,269 Other long-term obligations 1,762 1,499 1,350 —————————————————— Total liabilities 54,400 57,431 62,918 —————————————————— Stockholders' equity: Common stock 230 229 226 Additional paid-in capital 783,125 781,638 775,901 Accumulated other comprehensive income 1,295 1,214 1,064 Accumulated deficit (701,642) (704,978) (705,109) —————————————————— Total stockholders' equity 83,008 78,103 72,082 —————————————————— Total liabilities and stockholders' equity $ 137,408 $ 135,534 $ 135,000 ==================================== *T -0- *T Avanex Corporation CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP In thousands, except for per share data (Unaudited) Three Months Ended —————————————————- March 31, December 31, March 31, 2008 2007 2007 —————————————————- Net revenue: Third parties $ 49,523 $ 47,155 $ 38,339 Related parties 33 4,852 16,804 —————————————————- Total net revenue 49,556 52,007 55,143 Cost of revenue: Cost of revenue except for purchases from related parties 33,241 35,567 44,546 Purchases from related parties 220 321 299 —————————————————- Total cost of revenue 33,461 35,888 44,845 —————————————————- Gross profit 16,095 16,119 10,298 Operating expenses: Research and development 7,012 7,604 6,263 Sales and marketing 4,407 4,202 4,043 General and administrative: Third parties 4,621 4,980 4,384 Related parties - - 699 Amortization of intangibles 55 101 531 Restructuring 32 2 1,155 Loss on disposal of property and equipment 1 - 5 (Gain) on sale of subsidiary (1,996) - - —————————————————- Total operating expenses 14,132 16,889 17,080 —————————————————- Income (loss) from operations 1,963 (770) (6,782) Interest and other income 1,439 1,086 403 Interest and other expense (68) (3) (274) —————————————————- Income (loss) before income taxes 3,334 313 (6,653) Income tax benefit (provision) 2 (227) - —————————————————- Net income (loss) $ 3,336 $ 86 $ (6,653) =================================== Basic net income (loss) per common share $ 0.01 $ 0.00 $ (0.03) =================================== Diluted net income (loss) per common share $ 0.01 $ 0.00 $ (0.03) =================================== Weighted-average number of shares used in computing: Basic net income (loss) per common share 229,424 228,538 214,034 —————————————————- Diluted net income (loss) per common share 229,525 231,899 214,034 —————————————————- *T -0- *T Avanex Corporation RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) In thousands, except for per share data (Unaudited) Three Months Ended ——————————————————- March 31, December 31, March 31, 2008 2007 2007 ——————————————————- Net income (loss), GAAP $ 3,336 $ 86 $ (6,653) Items reconciling GAAP net income (loss) to non-GAAP net income (loss): Related to cost of revenue: Share-based payments 213 319 341 ——————————————————- Total related to cost of sales 213 319 341 ——————————————————- Related to operating expenses: Research and development - share-based payments 334 698 508 Sales and marketing - share- based payments 307 208 245 General and administrative - share-based payments 429 561 896 Amortization of intangibles 55 101 531 Restructuring: Share-based payments - - 3 All other 32 2 1,152 Loss on disposal of property and equipment 1 - 5 Gain on sale of subsidiary (1,996) - - Due diligence expenses related to abandoned acquisition activity - 199 - Arbitration expenses 171 185 - ——————————————————- Total related to operating expenses (667) 1,954 3,340 ——————————————————- Total related to net income (loss) (454) 2,273 3,681 ——————————————————- Non-GAAP net income (loss) $ 2,882 $ 2,359 $ (2,972) ===================================== Basic non-GAAP net income (loss) per common share $ 0.01 $ 0.01 $ (0.01) ===================================== Diluted non-GAAP net income (loss) per common share $ 0.01 $ 0.01 $ (0.01) ===================================== Weighted-average number of shares used in computing: Basic non-GAAP net income (loss) per common share 229,424 228,538 214,034 ——————————————————- Diluted non-GAAP net income (loss) per common share 229,525 231,899 214,034 ——————————————————- *T
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