Avanex drops revenue bomb, operations chief exits
Avanex has revealed that it faces a substantial shortfall in revenue for its latest financial quarter ended on December 31, 2005, because of a contract manufacturing problem that has delayed product shipments.
Revenue for the period is now estimated at $35 million-$37 million, way below the $41 million-$45 million figure that was originally forecast.
Paul Negus, the company s VP of operations, resigned last week, added Avanex in a filing to the Securities and Exchange Commission.
The financial impact will also be felt on the bottom line, where Avanex is striving to reduce the rate at which it is burning through cash.
As part of that effort, the Fremont, CA, company, whose III-V wafer fabrication facility is in Nozay, France, is in the process of contracting out most of its manufacturing effort.
While the Nozay facility will remain, albeit on a much smaller scale, Avanex has been transferring its module manufacturing lines to facilities in both China and Thailand recently.
And it is the transfer of manufacturing from Avanex's Erwin Park, NY, facility, where it made amplifiers and dispersion management products, to a major Asian contractor that caused the current operational problems.
Avanex closed the Erwin Park site in early December, so the company will now need to resolve the issues with its manufacturing partner to recoup the outstanding revenue.
After revealing the shortfall, Avanex's share price on the Nasdaq exchange dipped back below the crucial $1 mark.
The $1 price is crucial as the Nasdaq exchange can de-list stocks trading below that level for an extended period of time. After spending much of the latter half of 2005 hovering at around $0.80, Avanex s stock had recovered to around $1.30 prior to the revenue warning.
