Business Editors/High-Tech Writers
CAMPBELL, Calif.--(BUSINESS WIRE)--Oct. 31, 2002
P-Com, Inc. (Nasdaq:PCOM)
-- New orders received for P-Com Network Services -- Increased interest in products from Middle East -- Operating expenses reduced by $2.4 million
P-Com, Inc. (Nasdaq:PCOM), a worldwide provider of wireless telecom products and services, today reported net sales of $7.5 million for the third quarter ended September 30, 2002, compared to $8.7 million for the second quarter of 2002 and $10.3 million for the corresponding quarter a year ago.
As previously announced, the decline in P-Com's net sales was primarily related to the timing of orders placed under existing supply contracts for equipment sales to Asia-Pacific customers.
Gross profit margins were 11% in the quarter, compared to 17% in the previous quarter and minus 191% in the corresponding quarter a year ago due primarily to inventory write-downs. Operating expenses for the quarter were $7.5 million, compared to $9.9 million in the second quarter of 2002, and $10.7 million (excluding goodwill amortization) for the same period in 2001. Operating expenses included approximately $450,000 related to debt restructuring and non-recurring legal expenses. Included in other expense in the third quarter 2002 was approximately $791,000 related to the write-off of notes receivable and $754,000 for a vendor settlement.
Net loss for the quarter before extraordinary items was $9 million, or $.29 per share, compared to a net loss of $37.3 million, or $2.20 per share, for the same period in 2001, and a net loss of $8 million, or $.37 per share, in the second quarter of 2002.
"The state of the telecom industry remains uncertain and any attempt to project revenues for future quarters remains difficult," said P-Com Chairman George Roberts. "As a result, we continue to believe it is necessary to reduce costs and manage cash prudently. When the telecom turnaround occurs, P-Com will be well-positioned to supply global demand because of the recently completed development of our next generation products. This will give us a competitive advantage over other providers, who have either reduced or discontinued new product development. We are also encouraged by the recent increase in orders for P-Com Network Services and increased interest for our products from the Middle East."
Conference Call
Management will discuss both the results and the Company's outlook, and hold a question and answer session for investors today, October 31, 2002, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time. To listen to the call by phone, dial 1-877-777-1971 for U.S. calls or 1-612-332-0725 for international calls. To listen to a live broadcast over the Internet, go to www.p-com.com and click on the Investor Relations page, or go to StreetEvents at www.streetevents.com. A replay of the call will be available at both sites for 90 days.
About P-Com, Inc.
P-Com, Inc. develops, manufactures, and markets point-to-multipoint, point-to-point, and spread spectrum wireless access systems to the worldwide telecommunications market, and through its wholly owned subsidiary, P-Com Network Services, Inc., provides related installation support, engineering, program management and maintenance support services to the telecommunications industry in the United States. P-Com broadband wireless access systems are designed to satisfy the high-speed, integrated network requirements of Internet access associated with Business to Business and E-Commerce business processes. Cellular and personal communications service (PCS) providers utilize P-Com point-to-point systems to provide backhaul between base stations and mobile switching centers. Government, utility, and business entities use P-Com systems in public and private network applications. For more information visit www.p-com.com or call (408) 866-3666.
Safe Harbor Statement
Statements in this release that are forward-looking involve known and unknown risks and uncertainties, which may cause P-Com's actual results in future periods to be materially different from any future performance that may be suggested in this release. Such factors may include, but are not limited to, the need to raise equity, a severe worldwide slowdown in the telecommunications equipment and services sector, working capital constraints, fluctuations in customer demand and commitments, introduction of new products, commercial acceptance and viability of new products, cancellations of orders without penalties, pricing and competition, reliance upon subcontractors, the ability of P-Com's customers to finance their purchases of P-Com's products and/or services, the timing of new technology and product introductions, and the risk of early obsolescence. Further, P-Com operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond P-Com's control, such as announcements by competitors and service providers. Reference is made to the discussion of risk factors detailed in P-Com's filings with the Securities and Exchange Commission, including its reports on Form 10-K and 10-Q.
P-COM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) September 30, December 31, 2002 2001 --------- --------- ASSETS Current assets: Cash and cash equivalents $ 1,646 $ 7,103 Restricted cash -- 2,911 Accounts receivable, net 7,376 7,926 Inventory 21,195 31,946 Prepaid expenses and other assets 4,119 7,138 --------- --------- Total current assets 34,336 57,024 Property and equipment, net 12,659 17,627 Goodwill and other assets 11,875 17,583 --------- --------- $ 58,870 $ 92,234 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,162 $ 8,143 Other accrued liabilities 8,158 21,767 Loan payable to bank 1,612 -- Deferred contract obligations 8,000 8,000 Convertible subordinated notes 1,742 29,299 --------- --------- Total current liabilities 28,674 67,209 --------- --------- Long-Term Liabilities: Convertible subordinated notes 22,375 -- Other long-term liabilities 2,227 769 --------- --------- Total long term liabilities 24,602 769 --------- --------- Total liabilities 53,276 67,978 --------- --------- Stockholders' equity: Common Stock 16 8 Additional paid-in capital 333,204 319,994 Accumulated deficit (326,682) (294,460) Accumulated other comprehensive loss (944) (1,286) --------- --------- Total stockholders' equity 5,594 24,256 --------- --------- Total liabilities and stockholders' equity $ 58,870 $ 92,234 ========= ========= P-COM, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited) Three months ended Nine months ended Sep 30, Sep 30, 2002 2001 2002 2001 --------- --------- --------- --------- Sales: Product $ 6,350 $ 7,554 $ 22,292 $ 66,395 Service 1,100 2,696 2,234 30,274 --------- --------- --------- --------- Total sales 7,450 10,250 24,526 96,669 --------- --------- --------- --------- Cost of sales: Product 5,545 27,486 19,263 82,867 Service 1,108 2,293 2,210 22,686 --------- --------- --------- --------- Total cost of sales 6,653 29,779 21,473 105,553 --------- --------- --------- --------- Gross profit 797 (19,529) 3,053 (8,884) Gross margin 11% -191% 12% -9% Operating expenses: Research and development/engineering 2,439 4,952 10,266 15,626 Selling and marketing 1,709 1,589 5,268 6,197 General and administrative 3,357 4,191 12,476 15,778 Receivable valuation charge -- -- -- 11,600 Goodwill amortization -- 6,333 -- 7,756 --------- --------- --------- --------- Total operating expenses 7,505 17,065 28,010 56,957 --------- --------- --------- --------- Operating expense as a percentage of sales 101% 166% 114% 59% Loss from continuing operations (6,708) (36,594) (24,957) (65,841) Interest expense (964) (474) (1,972) (1,524) Gain on sale of subsidiary -- -- -- 9,814 Other expense, net (1,331) (1,127) (1,186) (377) --------- --------- --------- --------- Loss from continuing operations before income taxes, extraordinary item and cumulative effect of change in accounting principle (9,003) (38,195) (28,115) (57,928) Provision for income taxes -- (923) -- (316) --------- --------- --------- --------- Loss from continuing operations before extraordinary item and cumulative effect of accounting change (9,003) (37,272) (28,115) (57,612) Extraordinary gain on retirement of Notes -- -- 1,393 -- Cumulative effect of change in accounting principle -- -- (5,500) -- --------- --------- --------- --------- Net loss $ (9,003) $ (37,272) $ (32,222) $ (57,612) ========= ========= ========= ========= Basic and diluted loss per share: Loss from continuing operations $ (0.29) $ (2.20) $ (1.21) $ (3.51) Extraordinary gain on retirement of Notes -- -- 0.06 -- Cumulative effect of change in accounting principle -- -- (0.24) -- --------- --------- --------- --------- Basic and diluted net loss per share applicable to Common Stockholders $ (0.29) $ (2.20) $ (1.39) $ (3.51) ========= ========= ========= ========= Shares used in Basic and Diluted per share computation 31,104 16,950 23,323 16,413 ========= ========= ========= =========
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