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Ortel Reports Third Fiscal Quarter Results; Company Reports Second Consecutive Quarter of Profitability

Alhambra, CA. Ortel Corp. (Nasdaq:ORTL) today reported financial results for its third fiscal quarter ended Jan. 30, 2000.

For the current third quarter, revenues totaled $21.4 million, up 41 percent from $15.1 million, as restated, in the third quarter of fiscal year 1999, and up 10 percent from the second quarter of fiscal 2000. Income from continuing operations for the third quarter totaled $735,000, or 5 cents per diluted share, compared with a loss from continuing operations a year ago of $492,000, or 4 cents loss per share.

In the second quarter of fiscal 1999, the company recorded a charge for estimated expenses related to the discontinuance of its 980nm pump laser business. By the third quarter of fiscal 2000, the company determined that, after tax, $769,000 of the charge would not be required.

As a result, total net income for the third quarter of fiscal 2000 was $1.5 million, or 10 cents per diluted share, compared with a total net loss of $1.1 million, or 9 cents loss per share, in the same period last year. Gross margin in the third quarter of fiscal 2000 increased to 43 percent from 33 percent in the same period last year, primarily due to greater operating efficiencies and product mix.

In the current third quarter, investment in research and development rose 43 percent to $3.7 million compared with the same period last year, primarily due to Ortel s ongoing commitment to maintain its leadership position in broadband CATV and the aggressive pursuit of emerging opportunities in telecommunications. Research and development expense for the third quarter remained unchanged as a percentage of revenues. Selling, general and administrative expenses, which increased by 39 percent as the company built sales and marketing efforts, remained unchanged as a percentage of revenues.

For the nine months ended Jan. 30, 2000, revenues of $58.5 million were 19 percent higher than restated revenues of $49.3 million in the same period last fiscal year. The company recorded a net loss for the first nine months of fiscal 2000 of $6.3 million, or 53 cents loss per share, which included after-tax charges of $3.8 million related to discontinued wireless operations and other special first-quarter charges totaling $4.0 million after tax. For the nine months ended Jan. 31, 1999, as restated, Ortel recorded a net loss of $5.5 million, or 47 cents loss per share, which included $7.0 million (59 cents per share) in after-tax charges and operating losses related to the discontinuance of the wireless and pump laser businesses.

"Results for the quarter demonstrate the benefits of our continued efforts to reposition Ortel as a fiberoptics company focused on two core markets -- broadband CATV and telecommunications," said Stephen R. Rizzone, president, chief executive officer and chairman of the board.

"Over the past three months we have continued to execute on the strategic initiatives we implemented last summer -- to the benefit of our customers, employees and stockholders."

The company attributed strong revenue growth in the quarter primarily to increased sales of photo diodes, 1310nm transmitters, AWDM modules and transmitters and analog DWDM 1550nm laser transmitters. Additionally, Ortel registered several design wins and saw increased sampling activity for its new line of telecommunication products. Prior-period financial statements reflect the restatement of the wireless operations discontinued in the first quarter of fiscal 2000 and the 980nm pump laser operations discontinued in the second quarter of fiscal 1999. On Feb. 7, Lucent Technologies Microelectronics Group (NYSE:LU) announced a definitive agreement to acquire Ortel. Under terms of the agreement, which must be approved by Ortel stockholders and is subject to customary regulatory review, each share of Ortel common stock would be converted into 3.135 shares of Lucent common Stock. The acquisition is expected to be completed during the calendar quarter ending June 30, 2000.

"The signing of the definitive agreement with Lucent further validates our belief in Ortel s leadership in the development of optoelectronic product solutions," said Rizzone. "Ortel has been successful as a stand-alone company. However, as part of Lucent we will have the opportunity to rise to a new level. In addition to a rich product portfolio, Lucent provides Ortel with access to its industry-leading automated packaging processes that will help us more readily meet the increasing demand for our products."

Ortel designs, manufactures and supplies advanced optoelectronic technologies that provide the critical bandwidth and two-way interactivity essential for robust telecommunications and cable television applications. Ortel s fiber optics increase the capacity and performance of fiberoptic networks enabling them to handle ever-increasing volumes of voice, video and data communications.

The company has headquarters in Alhambra, with international operations in Sweden, Germany, France, Singapore and China. For more information visit Ortel s Web site at http://www.ortel.com.

This news release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These forward-looking statements include, but are not limited to, Ortel s results of operations or financial condition; future product, market and technology development; future benefits; estimated date to complete the transaction; and the expected impact of the transaction on the company. Factors that could cause actual results to differ materially include obtaining Ortel stockholder approval; obtaining regulatory approvals and clearances; changes in the estimated date for consummating the acquisition; price and product competition; changes in the capital spending of CATV operators and changes in customer order patterns; introduction of new products by competitors; reliance on major customers; and other risks identified from time to time in the company s Securities and Exchange Commission filings. Ortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. -0- *T

Contact:
Ortel Corp.,
Alhambra Sally Cholko, 626/293-3643
scholko@ortel.com

or
Pondel/Wilkinson Group
Cecilia A. Wilkinson/E.E. Wang, 310/207-9300
investor@pondel.com

 

Ortel Corp.,
Alhambra Sally Cholko, 626/293-3643
scholko@ortel.com
or
Pondel/Wilkinson Group
Cecilia A. Wilkinson/E.E. Wang, 310/207-9300
investor@pondel.com
 
E-mail: investor@pondel.com
Web site: http://www.ortel.com
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