net.com Announces Fourth Quarter and Fiscal Year 2005 Results
Company Announces Second Phase of NATO BME Contract FREMONT,
Calif., April 13 /PRNewswire-FirstCall/ -- Network Equipment
Technologies, Inc. (NYSE:NWK) today reported its quarterly and
annual results for the periods ended March 25, 2005. For the fourth
quarter of fiscal 2005, total revenue was $23.8 million, down from
$27.1 million in the same period of the prior year, a 12.1 percent
decrease, and down from $29.7 million in the third quarter of
fiscal 2005, a 19.6 percent decrease. Product revenue for the
quarter was $19.5 million, a decrease of 13.7 percent from $22.6
million in the same period of the prior year, and a decrease of
23.1 percent from $25.4 million in the third quarter of fiscal
2005. More than 20 percent of product revenue came from the
company's new products, SCREAM and SHOUT, for the fourth quarter of
fiscal year 2005. Net loss for the quarter was $4.1 million, or a
loss of $0.16 per share, compared to net loss for the same period
of the prior year of $3.5 million, or $0.14 per share. The loss
resulted primarily from a reduction in orders during the quarter
from government entities. For the fiscal year, total revenue was
$114.2 million, down 10.1 percent from $127.0 million in fiscal
2004. Product revenue for the year was $96.7 million, down 10.5
percent from $108.1 million in fiscal 2004. Net loss for the year
was $6.4 million, or $0.26 per share, compared to a net loss of
$559,000, or $0.02 per share, in fiscal 2004. As announced in the
company's preliminary earnings release on March 28, the Board of
Directors has approved a stock buy-back program of up to $10
million over the next two years, based on the company's increased
cash levels and the potential value reflected in the price of the
Company's common stock versus the Board's view of the long-term
value of the company. This stock repurchase program underscores the
Board's confidence in the company's direction. The company's cash,
including long term restricted cash, increased over the course of
the year by $6.7 million to $108.7 million at the end of fiscal
2005, up from $102.0 million at the end of the prior year and
$104.7 million at the end of the third quarter of fiscal 2005.
President and CEO Hubert "Bert" Whyte remarked, "We are pleased to
announce that we have signed a contract with NATO for follow-on
development of their 26-nation network. We have acknowledged the
'lumpiness' of our government business, though there continues to
be significant opportunity in this space. To combat this lumpiness,
it is imperative that we develop the strength of our new products
in all three market sectors -- government, enterprise and carrier
-- but primarily in the enterprise voice over IP migration space.
Our focus is on the future and we have taken steps to strengthen
our organization with highly skilled people in the North American
enterprise and channel space." "Additionally," Whyte continued, "we
recorded our first revenue for SHOUT systems to Microsoft's IT
organization and continue to learn new capabilities of the platform
with their live implementation. We are very encouraged by their use
of SHOUT. Microsoft's focus on real-time collaboration as recently
announced with its Live Communications Server represents powerful
communications opportunities for the future. We are looking forward
to demonstrating our capabilities in that dynamic environment."
Highlights: -- Contract signed for the next phase of the NATO BME
network; -- Initial product revenue during the quarter from
Microsoft for its global IT network; -- SHOUT platforms for secure
voice sold through Diversified Technology for the highest levels of
Federal government; -- Sale of SHOUT platforms to Foreign Affairs
Canada for testing of secure IP voice and fax communications for
potential deployment to their embassies worldwide; -- Announced
partnership with Pannaway Technologies to sell SCREAM and SHOUT to
the independent operating companies (IOCs) for converged broadband
voice, video and data delivery; -- Increased sales to IOCs,
including Lennon Telephone for the first delivery of SHOUT in the
U.S. for voice over cable, sold in conjunction with Pannaway; and
Manti Telecom, using SCREAM to deliver video on demand over an ATM
network by translating ATM to IP for video encoding (both announced
separately today); and -- Sales of SHOUT to Nomura Asset Management
in Japan for their internal communications network. About net.com
Network Equipment Technologies, doing business as net.com, is a
leading provider of networking equipment that enables enterprises,
governments and carriers to adapt to a broadband future. An
architect of the networking industry, net.com has been supplying
service providers, governments and enterprises around the world
with bulletproof networking technology for more than 20 years. net
performance. net results. net.com. Visit http://www.net.com/ for
more information. Forward Looking Statements This press release
contains forward-looking statements relating to trends, products,
customer relationships, partnerships, and possible future operating
results within the meaning of the safe harbor provisions of Section
21E of the Securities Exchange Act of 1934. Investors are cautioned
that such statements are based on current expectations, forecasts
and assumptions that involve risks and uncertainty that may cause
actual results to differ materially from those expressed or implied
in the forward-looking statements. Factors that could affect such
results include the volume and timing of orders, the ability to
recognize revenue within a particular quarter for shipments made in
the quarter, our ability to commercialize new products and product
enhancements, the degree to which trial activity results in further
product sales, and changes in the mix of products we sell and the
potential reductions in margin as a result, as well as the factors
identified in net.com's Quarterly Report on Form 10-Q for the
quarter ended December 24, 2004. 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.
http://www.net.com/ -- for more information. net.com, SCREAM and
SHOUT are trademarks of Network Equipment Technologies, Inc. NOTE
TO EDITORS: Financial tables follow NETWORK EQUIPMENT TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands
except per share data) (unaudited) Quarter Ended Fiscal Year Ended
Mar 25, Mar 26, Mar 25, Mar 26, 2005 2004 2005 2004 Revenue:
Product $19,509 $22,616 $96,726 $108,127 Service and other 4,339
4,508 17,492 18,909 Total revenue 23,848 27,124 114,218 127,036
Costs of sales: Cost of product revenue 9,276 8,742 38,847 43,142
Cost of service and other revenue 3,786 4,353 16,197 16,312 Total
cost of sales 13,062 13,095 55,044 59,454 Gross margin 10,786
14,029 59,174 67,582 Operating expenses: Sales and marketing 6,350
7,732 27,530 31,052 Research and development 5,978 6,881 26,053
27,609 General and administrative 2,660 2,863 10,283 10,402
Restructuring costs (benefit) (70) (85) 4,047 181 Total operating
expenses 14,918 17,391 67,913 69,244 Loss from operations (4,132)
(3,362) (8,739) (1,662) Other income (expense), net (42) 64 1,338
1,652 Interest income (expense), net 79 (122) (131) (529) Loss
before taxes (4,095) (3,420) (7,532) (539) Income tax provision
(benefit) 15 38 (1,100) 20 Net loss $(4,110) $(3,458) $(6,432)
$(559) Net loss per share: Basic $(0.16) $(0.14) $(0.26) $(0.02)
Diluted $(0.16) $(0.14) $(0.26) $(0.02) Common and common
equivalent shares: Basic 24,959 23,977 24,531 23,314 Diluted 24,959
23,977 24,531 23,314 NETWORK EQUIPMENT TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) Mar 25, Mar
26, 2005 2004 Assets Cash and investments $108,011 $99,732 Accounts
receivable, net 15,725 19,709 Inventories 13,274 13,665 Prepaid
expenses and other assets 2,525 2,898 Total current assets 139,535
136,004 Property and equipment, net 26,318 31,423 Other assets
2,623 4,657 $168,476 $172,084 Liabilities and Stockholders' Equity
Accounts payable $8,602 $6,334 Other current liabilities 14,557
15,681 Total current liabilities 23,159 22,015 Long term
liabilities -- 1,705 7 1/4% convertible subordinated debentures
24,706 24,706 Stockholders' equity 120,611 123,658 $168,476
$172,084 DATASOURCE: Network Equipment Technologies, Inc. CONTACT:
Brenda Ropoulos, Director of Corporation Relations of Network
Equipment Technologies, Inc., +1-510-574-2508 or Web site:
http://www.net.com/
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