Gross Margin Improves and Operating Loss
Decreases Due to Cost Reductions
Company Reaches Advanced Stage With
Respect to a New Tier-1 Customer in India
Company Revises Revenue Guidance for 2012
to $16 Million Primarily Due to Order Delay From BSNL
Orckit Communications Ltd. (Nasdaq:ORCT) today reported results for
the third quarter and nine months ended September 30, 2011.
Revenues in the third quarter of 2011 were $3.6 million compared
to $5.0 million in the previous quarter ended June 30, 2011 and
$4.7 million in the comparable quarter last year.
Net loss for the quarter ended September 30, 2011 was $1.5
million, or $(0.16) per diluted share, compared to $5.0 million, or
$(0.22) per share, for the previous quarter ended June 30, 2011 and
$6.0 million, or $(0.31) per share, for the third quarter of
2010.
Adjustments related to the Company's Series A convertible notes
issued in March 2007 and Series B convertible notes issued in June
2011 resulted in financial income in the aggregate amount of
$967,000 in the quarter ended September 30, 2011 compared to
financial expense of $589,000 in the previous quarter ended June
30, 2011. Adjustments related to the conversion terms of the Series
A convertible notes resulted in financial expense of $440,000 in
the third quarter of 2010.
Revenues for the nine months ended September 30, 2011 were $13.1
million compared to $8.0 million for the nine months ended
September 30, 2010. Net loss for the nine months ended September
30, 2011 was $12.5 million, or $(0.57) per diluted share, compared
to $19.9 million, or $(1.07) per share, for the nine months ended
September 30, 2010. Adjustments related to the Company's Series A
and Series B convertible notes resulted in financial income of
$26,000 in the nine months ended September 30, 2011 and financial
expense of $848,000 in the nine months ended September 30,
2010.
As a result of the settlement of a legal proceeding during the
second quarter of 2011, the Company reversed a provision with
respect to this proceeding. This reversal reduced selling,
marketing, general and administrative expenses by approximately
$870,000 during the quarter ended June 30, 2011 and the nine months
ended September 30, 2011. Results for the nine months ended
September 30, 2010 include other income of $1.6 million as a result
of the sale of an equity investment in the first quarter of 2010.
Results for the third quarter and nine months ended September 30,
2011 include other income of $369,000 from the sale of this equity
investment which was released from escrow in the third quarter
pursuant to the terms of the transaction.
Key highlights:
- Operating loss decreased to $3.8 million this quarter from $4.0
million in the second quarter of 2011 and $5.7 million in the
comparable quarter in 2010. The improvement from the prior quarter
is primarily a result of the implementation of a cost reduction
program that reduced operating expenses. Additional cost reductions
are also anticipated in the fourth quarter of 2011. The Company's
gross margin percentage improved for the sixth straight
quarter.
- The Company reaches advanced stage with respect to a new Tier-1
customer in India after successfully completing a full product and
technology evaluation.
- Opportunities in India are the Company's main focus and include
Tier-1 and Tier-2 telco service providers from the private sector
that have already evaluated the Company's technology and service
offerings.
- Successful cooperation with 3M in Germany resulting in the
addition of two new customers that selected the Company's PTN
solutions.
- Orckit receives purchase orders from two other new customers.
One new customer is located in the Far East and the other in Latin
America.
- Growing interest in field-trials and demos with Tier-1 and
Tier-2 service providers worldwide. Early adopters already have
started to deploy PTN in their networks and the vast majority of
the market is expected to follow this trend.
Izhak Tamir, President of Orckit, said, "We believe
that as the mobile industry continues to evolve, Orckit's
technology is well positioned to be incorporated into the
infrastructure of telecom companies worldwide. During the third
quarter, we successfully completed a product and technology
evaluation with respect to a potential new Tier 1 customer in
India, which we believe will result in a significant business
opportunity. In addition, we continue to strengthen our
partnership with 3M and together added two new customers to our
growing customer base."
Mr. Tamir added, "Our prior forecast included a purchase order
expected from BSNL as part of BSNL's fiber-to-the-home project in
India. This purchase order has not yet been released by BSNL. Based
on our discussions with BSNL management in the last few weeks, we
believe the purchase order will be received in the first quarter of
2012. The delay in the issuance of BSNL's purchase order, combined
with the postponement to the first quarter of 2012 of separate
purchase orders from two European customers that were originally
forecasted to be received in the fourth quarter of 2011, has caused
us to revise our guidance to $16 million in revenues for 2011."
Conference Call
Orckit Communications will host a conference call on November
30, 2011, at 9:00 a.m. ET. The call can be accessed by dialing
1-877-316-9044 (United States) and 1-706-634-2329 (International).
Please use the code 15875328.
A replay of the call will be available at www.orckit.com. A
dial-in replay of the call will be also available through December
30, 2011 at 11:59 p.m. at 1-855-859-20566 (United States) and
1-404-537-3406 (International). To access this replay, enter the
following code: 15875328.
About Orckit Communications Ltd.
Orckit facilitates the delivery by telecommunication providers
of high capacity broadband residential, business and mobile
services over wireline or wireless networks with its
Orckit-Corrigent family of products. With 20 years of field
experience with Tier-1 customers located around the
world, Orckit has a firm foothold in the ever-developing world
of telecommunications. Orckit-Corrigent's product portfolio
includes Packet Transport Network (PTN) switches - an MPLS and
MPLS-TP dual stack based portfolio enabling advanced packet as well
as legacy services over packet networks with a wide set of
transport features. Orckit-Corrigent markets its products directly
and indirectly through strategic alliances, as well as through
distribution and reseller partners worldwide. Orckit was founded in
1990 and became publicly traded in 1996. Orckit is dually listed on
NasdaqGM (ORCT) and the Tel Aviv Stock Exchange and is
headquartered in Tel-Aviv, Israel.
For more information, please visit http://www.orckit.com. Follow
Orckit on Twitter @ORCT
Certain matters discussed in this news release are
forward-looking statements that involve a number of risks and
uncertainties including, but not limited to, the Company's history
of losses, dependence on a limited number of customers, risks in
product development plans and schedules, rapid technological
change, changes and delays in product approval and introduction,
customer acceptance of new products, the impact of competitive
products and pricing, market acceptance, the lengthy sales cycle,
exchange rate fluctuations, fluctuation in order size, proprietary
rights of the Company and its competitors, need for additional
financing, the ability to repay the convertible notes, risk of
operations in Israel, government regulation, dependence on third
parties to manufacture products, the effect of current global
economic conditions, as well as turmoil in the financial and credit
markets, and other risk factors detailed in the Company's United
States Securities and Exchange Commission filings. Actual results
may materially differ. Orckit assumes no obligation to update the
information in this release.
TABLES TO FOLLOW
ORCKIT COMMUNICATIONS
LTD. |
CONSOLIDATED
STATEMENTS OF OPERATIONS |
(US$ in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September
30 |
September
30 |
|
2011 |
2010 |
2011 |
2010 |
Revenues |
$ 3,590 |
$ 4,692 |
$ 13,115 |
$ 7,987 |
Cost of revenues |
1,938 |
2,955 |
7,469 |
5,383 |
Gross profit |
1,652 |
1,737 |
5,646 |
2,604 |
|
|
|
|
|
Research and development expenses,
net |
2,306 |
3,476 |
8,439 |
10,827 |
Selling, marketing general and
administrative expenses |
3,148 |
4,005 |
10,342 |
12,056 |
Total operating
expenses |
5,454 |
7,481 |
18,781 |
22,883 |
Operating loss |
(3,802) |
(5,744) |
(13,135) |
(20,279) |
|
|
|
|
|
Financial income (expense),
net |
935 |
181 |
228 |
(350) |
Adjustments related to series A and
series B convertible notes |
967 |
(440) |
26 |
(848) |
Total financial income (expense),
net |
1,902 |
(259) |
254 |
(1,198) |
Other income |
369 |
0 |
369 |
1,624 |
|
|
|
|
|
Net loss |
$ (1,531) |
$ (6,003) |
$ (12,512) |
$ (19,853) |
Net loss per share -
basic |
$ (0.07) |
$ (0.31) |
$ (0.55) |
$ (1.07) |
Net loss per share -
diluted |
$ (0.16) |
$ (0.31) |
$ (0.57) |
$ (1.07) |
Weighted average number of shares
outstanding - basic |
22,746 |
19,580 |
22,665 |
18,516 |
Weighted average number of shares
outstanding - diluted |
27,110 |
19,580 |
24,033 |
18,516 |
|
ORCKIT COMMUNICATIONS
LTD. |
CONSOLIDATED BALANCE
SHEETS |
(US$ in
thousands) |
|
|
|
|
September 30 |
December 31 |
|
2011 |
2010 |
ASSETS |
|
|
Current assets: |
|
|
Cash and short term marketable
securities |
$ 28,438 |
$ 19,195 |
Trade receivables |
7,767 |
6,624 |
Other receivables |
2,649 |
3,197 |
Inventories |
3,840 |
3,183 |
Total current assets |
42,694 |
32,199 |
|
|
|
Long term marketable
securities |
0 |
16,351 |
Severance pay fund |
3,392 |
3,611 |
Property and equipment,
net |
748 |
923 |
Deferred issuance costs,
net |
69 |
173 |
|
|
|
Total assets |
$ 46,903 |
$ 53,257 |
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (NET OF CAPITAL DEFICIENCY) |
|
|
Current liabilities: |
|
|
Trade payables |
$ 2,757 |
$ 3,778 |
Accrued expenses and other
payables |
7,754 |
6,910 |
Deferred income |
2,528 |
1,933 |
|
|
|
Convertible subordinated notes,
series A |
25,689 |
-- |
Adjustments due to convertible
notes conversion terms |
(476) |
-- |
Convertible subordinated notes
series A, net |
25,213 |
-- |
Total current liabilities |
38,252 |
12,621 |
|
|
|
Long term liabilities : |
|
|
Convertible subordinated notes,
series A |
-- |
26,151 |
Adjustments due to convertible
notes conversion terms |
-- |
(1,213) |
Convertible subordinated notes
series A, net |
-- |
24,938 |
Convertible subordinated notes,
series B |
6,675 |
-- |
Accrued severance pay and
other |
4,048 |
4,446 |
Total long term
liabilities |
10,723 |
29,384 |
Total
liabilities |
48,975 |
42,005 |
|
|
|
Shareholders' equity (capital deficiency
) |
(2,072) |
11,252 |
Total liabilities and
shareholders' equity (net of capital deficiency) |
$ 46,903 |
$ 53,257 |
CONTACT: Rob Fink
KCSA Strategic Communications
(212) 896-1206
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