Network Equip (NYSE:NWK)
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Network Equipment Technologies, Inc. Announces Earnings of $.06
per Share
Company Signs Deal with Microsoft IT to provide IP/PSTN Gateways
FREMONT, Calif., Oct. 13 /PRNewswire-FirstCall/ -- net.com (NYSE:NWK) today
reported its results for the second quarter of fiscal 2005, ended September 24,
2004. New product revenue and reduced expenses led to a return to profitability
this quarter.
Total revenue was $31.6 million, compared to $29.1 million for the first
quarter of fiscal 2005, an increase of 8.6 percent, and $31.9 million for the
second quarter of fiscal 2004, a decrease of 1.1 percent.
Product revenue was $27.5 million for the second quarter of fiscal 2005,
compared to $24.4 million for the first quarter of fiscal 2005, an increase of
12.6 percent, and $27.8 million for the second quarter of last year, a decrease
of 1.1 percent. New products -- SCREAM broadband services platform, SHOUTIP for
IP telephony services, and netMS for integrated network management --
represented more than 18% of product revenue, and nearly 16% of overall revenue
in the current quarter. More detail follows under "Quarterly Highlights."
The Company reported net income of $1.4 million, or $0.06 per share for the
second quarter of fiscal 2005, compared to a net loss of $829,000, or $0.03 per
share, in the first quarter of fiscal 2005, and net income of $400,000, or
$0.02 per share, for the second quarter of last year.
Total revenue for the six-month period ended September 24, 2004 was $60.7
million, compared to $66.0 million for the same period of fiscal 2004. Net
income for the six-month period ended September 24, 2004 was $561,000, or $0.02
per share, compared to $2.0 million, or $0.08 per diluted share, for the same
period of fiscal 2004.
Bert Whyte, net.com's president and CEO noted, "Just over a year ago, while
pursuing tier-one carrier business, we recognized the imperative to push into
additional markets with our new products. Today, as we see continued delays in
carrier spending, that strategy has started to serve us well. We have made the
first major inroads into the enterprise telephony market, and we have done so
with our first new enterprise-focused offering in years. With three product
lines that address three critical market segments -- enterprise, government and
carrier -- we have a strong revenue base and diverse opportunities for growth."
Highlights:
* Microsoft Corporation selected net.com's ShoutIP platform as the
gateway component in its global voice over IP (VoIP) network. After
extensive competitive testing, Microsoft selected SHOUT2500 for its
Redmond headquarters and larger offices and SHOUT900 for its smaller
offices. ShoutIP will provide the gateway components that will help
to migrate the company's voice traffic from a wide variety of PBX
platforms to a global VoIP network as part of the company's IP-PBX
strategy, providing linking, cross connection, and voice switching
across a worldwide network infrastructure.
* The Promina platform was deployed to deliver high quality voice and
data services over the IP networks of the principal media facilities
for the Democratic National Convention, the Republican National
Convention, and the Olympic Games in Athens.
* The company achieved TL 9000 quality system certification from the
Quality Excellence for Suppliers of Telecommunications (QuEST)
Forum. net.com is now among an elite group of telecommunications
companies to have met the rigorous standards for TL 9000
registration.
* The SCREAMlink program continued to gain traction with sales of over
$1.5 million in equipment to customers in the Government sales
channel to migrate their existing Promina networks to broadband.
* The company saw additional ShoutIP related activity as it
successfully tested secure voice applications within the Department
of Defense, for executive mobile deployments, and sales into
multiple accounts, including the Air Force, Navy, Marines, and Army.
DSCS, DISA and KICC all deployed additional SCREAM and Promina
equipment.
Expense Control and Restructuring
Whyte added, "Because the market remains unpredictable, particularly in the
carrier space, and we have now achieved key development milestones in the
SCREAM and ShoutIP product families, we are refining our ongoing investment in
certain areas of R&D to focus on the business at hand. In addition, we continue
to trim costs and expenses throughout the organization to allow us to achieve
profitability on lower revenues.
Conference Call
Management will discuss the quarter's results in a conference call beginning
today at 2:00 p.m. PDT. The toll-free number to participate in the conference
is 800-603-9684, conference name "Network Equipment Technologies."
Additionally, the conference is being webcast live from the company's website,
http://ir.net.com/ . Slides that accompany the prepared discussion will also be
available on the website. Participants are advised to log in early to the
website to download slides and media plug-ins, if needed, and perform webcast
system compatibility tests. Live Q&A at the conclusion of prepared remarks will
be conducted from the conference call only.
About net.com
Network Equipment Technologies, Inc., doing business as net.com, develops and
delivers service creation platforms for broadband, Internet protocol (IP)
telephony, and multiservice networks. An architect of the networking industry,
net.com has been supplying service providers, governments and enterprises
around the world with bullet-proof networking technology for more than 20
years. net performance. net results. net.com.
NOTE: Promina, ShoutIP, and SCREAM are registered trademarks, and net.com is a
trademark of Network Equipment Technologies, Inc.
Forward-looking statements
Statements made in this press release other than statements of historical fact
are forward-looking including, for example, those relating to products and
applications, existing and future customers, business operations, expense
controls and future profitability or other financial results. Investors are
cautioned that these statements are based upon current expectations, forecasts
and assumptions that involve risks and uncertainty that may cause actual
results, events or company performance to differ materially from those
expressed or implied in the forward-looking statements. Among other risks and
uncertainties, our new products have not achieved broad market acceptance and
future sales of such products may fluctuate dramatically; customer testing and
trials of our new products can be lengthy and might not lead to additional
sales; new applications for our products, even if adopted by some customers,
might not have broad usage; and many of our current and prospective customers
are restricting spending, which could negatively affect our earnings in future
quarters. The factors identified in net.com's filings with the Securities and
Exchange Commission, including Forms 10-K and 10-Q, could also affect the
forward-looking statements contained in this press release. net.com disclaims
any intention or obligation to update or revise any forward looking statements,
whether as a result of new information, future events or otherwise.
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Quarter Ended Six Months Ended
Sep 24, Sep 26, Sep 24, Sep 26,
2004 2003 2004 2003
Revenue:
Product $27,461 $27,776 $51,854 $57,073
Service and other 4,135 4,164 8,839 8,968
Total revenue 31,596 31,940 60,693 66,041
Costs of sales:
Cost of product
revenue 10,120 11,013 19,190 23,367
Cost of service and
other revenue 4,317 3,607 8,330 7,565
Total cost of sales 14,437 14,620 27,520 30,932
Gross margin 17,159 17,320 33,173 35,109
Operating expenses:
Sales and marketing 6,816 7,264 14,551 15,118
Research and
development 7,088 6,949 13,941 13,789
General and
administrative 2,442 2,442 5,109 5,190
Restructuring costs
(benefits) (103) -- 1,271 266
Total operating
expenses 16,243 16,655 34,872 34,363
Income (loss) from
operations 916 665 (1,699) 746
Other income (expense),
net (26) (68) 1,343 1,519
Interest expense, net (99) (197) (203) (290)
Income (loss) before
taxes 791 400 (559) 1,975
Income tax benefit (599) -- (1,120) (15)
Net income $1,390 $400 $561 $1,990
Per share data:
Net income:
Basic $0.06 $0.02 $0.02 $0.09
Diluted $0.06 $0.02 $0.02 $0.08
Common and common
equivalent shares:
Basic 24,343 23,066 24,286 22,939
Diluted 25,070 24,342 24,650 24,136
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sep 24, Mar 26,
2004 2004
Assets (unaudited)
Cash and investments $99,506 $99,732
Accounts receivable, net 24,214 19,709
Inventories 12,709 13,665
Prepaid expenses and other assets 2,755 2,898
Total current assets 139,184 136,004
Property and equipment, net 29,715 31,423
Other assets 4,390 4,657
$173,289 $172,084
Liabilities and Stockholders' Equity
Accounts payable $6,290 $6,334
Other current liabilities 15,705 15,681
Total current liabilities 21,995 22,015
Long term liabilities 1,518 1,705
7 1/4% convertible subordinated debentures 24,706 24,706
Stockholders' equity 125,070 123,658
$173,289 $172,084
DATASOURCE: Network Equipment Technologies, Inc.
CONTACT: Brenda Ropoulos, Director of Corporate Relations of net.com,
+1-510-574-2508, or
Web site: http://www.net.com/