JDS Uniphase and Ericsson cause concern with earnings results
Announcing its December quarter results yesterday, JDS Uniphase added to continuing uncertainty in the fiber-optic market by stating that it was no longer sure that March would see the low point in sales. The company reported sales of $286 million for the quarter ending December 29, 2001, a sequential drop of 13% from the September quarter figure of $329 million. Compared to the year-ago period, sales fell to less than one-third of the $925 million figure recorded for the December 2000 quarter. The company s pro forma losses were $255 million, or 19 cents a share for the December 2001, compared with profits of $208 million, or 21 cents a share, in the year-ago period.
JDS Uniphase s future guidance gave cause for concern. The company repeated early estimates that sales in the current quarter (March 2002) would fall a further 10-15% from the $286 million reported in December 2001 quarter. However, the earnings release stated that "recent changes to its sales forecasts have caused the Company to be uncertain that the March quarter will represent the low point in sales for the current downturn." Previous forecasts had indicated that the June 2002 quarter would be flat, or even up slightly from the March quarter, but this no longer seems to be the case. Moreover, even when recovery does occur, it will proceed at a "modest" rate initially. Even when although it continues to believe that recovery from the low point is expected initially to be modest.
JDS Uniphase has undergone a great deal of consolidation recently and has shed over half its workforce. Annual costs have fallen by $800 million, and the company s break-even point is now pegged at quarterly sales of $350 million. Officials admitted that there could be more job cuts and plant closures to come.
Ericsson reports worse-than-expected loss
After encouraging news from Nokia yesterday, Ericsson reported a worse-than-expected loss for its December 2001 quarter. Although December quarter sales of $5.49 billion beat analysts estimates, the company recorded a net loss of $328 million (or 4 cents per share) while analysts had forecast a loss of $290 million. The full-year loss for 2001 was $2 billion, compared to $2 billion profit in 2000.
Ericsson forecast a loss in the first quarter of 2002, followed by improved results as the year progresses. The company estimated that total handset sales were 390 million in 2001, compared to Nokia figures of 380 million, and predicted 10% unit volume growth in 2002, driven by increased availability of replacement phones with GPRS, Bluetooth, color screens and multi-media messaging. It also estimated that the number of mobile subscribers had grown to 940-950 million by the end of 2001, and 200 million new subscribers would be added in 2002, a solid growth rate of 20-25%.
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