Aborted Acquisition Costs Avanex $2 Million
Although still making a hefty loss at the operating level, US optical component and chip producer Avanex posted a big increase in sales revenue for its latest financial quarter.
At $55.6 million, revenue for the three months that ended on December 31 came in 54 percent higher than the equivalent period of the prior year.
Despite the improving revenue picture, Avanex made a net loss of $8.6 million, according to the standard accounting treatment.
But that figure was certainly not helped by a mysterious exceptional charge of $2.1 million. In an entry buried deep in the Fremont, CA, company s statement of operations, Avanex states that its net loss for the latest quarter included these significant costs, and attributed them to "due diligence expenses related to abandoned acquisition activity".
Exactly which aborted acquisition that cost refers to is not made clear in either the financial release or Avanex s Security and Exchange Commission (SEC) filing, although in late 2006 rumors of a forthcoming merger between Avanex and fellow chip fab owner and San Jose neighbor Bookham were rife.
Whether or not the abandoned deal referred to Bookham, Avanex could have done without the extra expense and would have posted a net loss of $6.5 million if it had not been on the agenda.
On a more positive note, Avanex CEO Jo Major said that despite a short-term flattening of metro and long-haul markets for its optical components, the second half of 2007 should herald a return to growth.
With $37.4 million in cash reserves listed on its balance sheet, Avanex is taking measures to reduce its rate of cash burn, including an attempt to improve manufacturing yields. In the latest quarter Avanex also cashed in some of its short-term investments to bolster its overall cash position.