DALLAS, Aug. 4 /PRNewswire-FirstCall/ -- Somera Communications
(NASDAQ:SMRA), a global provider of telecommunications asset
management and recovery services, today announced financial results
for the quarter ended June 30, 2005. Total revenue for the second
quarter of 2005 was $18.7 million, compared with $20.5 million in
the first quarter of 2005. This also compares with $25.8 million in
the second quarter of 2004. The sequential quarter decline in
revenue is attributable to a temporary decline in brokerage
revenues resulting from a restructuring of the sales and supply
organizations in this business to better position it for future
growth. Net loss was $7.9 million, or ($0.16) per share, for the
second quarter of 2005, compared with a net loss of $3.3 million,
or ($0.07) per share, for the first quarter of 2005. This also
compares to a net loss of $3.9 million, or ($0.08) per share, for
the second quarter of 2004. Net loss for the second quarter of 2005
reflects a $1.8 million writedown of goodwill from an acquisition
that closed in 2000, the recognition of $421,000 in outstanding
sales taxes from 2001, 2002 and 2003, and $749,000 in expenses
associated with an acquisition the Company has decided against
pursuing. Excluding these charges, pro forma net loss in the second
quarter was ($0.10) per share. David Heard, CEO of Somera,
commented on the second quarter results, "The restructuring of our
brokerage business caused us to miss a number of transaction
opportunities in the second quarter. However, the brokerage market
remains healthy, and we believe the steps taken to improve our
sales and supply organizations will stabilize our brokerage
revenues and better position this business for growth in the
future. "We continue to make good progress in developing our
Lifecycle Management Services business, with programs and services
revenues increasing 43.4% over the prior quarter. During the second
quarter, we received commitments from an RBOC and a major wireless
carrier to begin new regional RecoveryPLUS(TM) implementations,
which should begin to generate meaningful revenue in the second
half of 2005. Our services business continues to gain momentum --
as demonstrated by our announcement today of a new relationship
with S.A. Telecom, a major wireless carrier in Bangladesh -- and we
expect to see consistent growth in our customer base with each
quarter. "In the third quarter, we expect modest revenue growth
over the second quarter. We also expect a net loss per share in the
range of $0.06 to $0.09 for the third quarter. We believe we will
make steady progress towards profitability, although given the
current growth rates in the brokerage and services businesses, we
now believe our return to profitability will take place in the
first half of 2006. Following the organizational changes we have
made during the first half of 2005, we believe we now have the
right people, programs, intellectual property, and financial
resources in place to capitalize on the market opportunity emerging
for telecom asset management services," said Mr. Heard. Second
Quarter Financial Highlights Gross margin for the second quarter of
2005 was 33.6% and in line with the Company's expectations. This
compares with a gross margin of 27.1% in the second quarter of
2004, and 37.4% in the first quarter of 2005. Operating expenses
for the second quarter of 2005 were $14.1 million, compared with
$10.9 million in the second quarter of 2004, and $10.8 million in
the first quarter of 2005. The sequential quarter increase in
operating expenses is primarily due to one-time charges totaling
$3.0 million related to goodwill impairment, recognition of
outstanding sales taxes from prior years, and terminated M&A
activities. Somera's balance sheet at June 30, 2005 included $27.3
million in cash, cash equivalents, and short-term investments,
$30.5 million in working capital and no long-term debt. Conference
Call and Webcast Management will hold a teleconference with
simultaneous webcast today at 5:00 p.m. Eastern Time (2:00 p.m.
Pacific Time) to discuss second quarter results. Please dial
800-240-2134 for domestic callers, or 303-262-2143 for
international callers. The call will be webcast on the Investor
Relations page of the Somera web site at http://www.somera.com/.
Listeners will need to have Microsoft Media Player installed on
their computers. A telephonic replay will be available from one
hour after the call ends through August 11, 2005, at 800-405-2236
for domestic callers, or 303-590-3000 for international callers,
passcode 11034468. Non-GAAP Financial Measures This press release
contains pro forma net loss per share results that are not in
accordance with GAAP because they exclude identified non-recurring
charges. The estimated amount of the expected excluded charges is
stated in this release so that pro forma net loss per share results
can be reconciled to GAAP results. The pro forma net loss per share
results should not be considered as a substitute for, or superior
to, measures of financial performance prepared in accordance with
GAAP, and may be different from non- GAAP financial measures used
by other companies. Somera management uses this pro forma measure
in evaluating the potential impact of certain operating decisions
on projected financial results, in comparing the Company's
historical operating results and in comparing to competitors'
operating results. Somera includes this pro forma measure in this
press release because it believes this measure enhances
comparability of Somera's results of operations to those of
competitors', to operating results Somera historically has reported
and to financial models and expectations of securities analysts.
About Somera Somera launched its family of Lifecycle Management
Services in 2004 in response to an industry-wide need for telecom
asset management to optimize return on assets. Somera's product
offerings enable service providers to generate greater value from
legacy assets in the form of lower operating costs, longer product
life, higher productivity, and real measurable capital savings.
With Somera LifecyclePLUS, customers can outsource elements of
network operations, logistics, and technical service. Somera
RecoveryPLUS(TM) is a program approach to deliver documented
savings and expense relief by recovering hidden value in current
underutilized assets and inventories. Somera RepairPLUS provides
comprehensive support for wireless, wireline, and data products at
significant savings and reduced cycle times. These services are in
addition to Somera's traditional Brokerage business that provides
immediate availability of quality, warranted new and refurbished
equipment at savings of 25 to 60%. Founded in 1995, Somera has
developed an impressive base of over 1,100 customers worldwide,
including the industry leaders from each segment of the
telecommunications market. Visit Somera on the web at
http://www.somera.com/. This news release contains forward-looking
statements as that term is defined in Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements about Somera's
expected financial results for the third quarter of 2005, the
timing of Somera's expected return to profitability on a GAAP basis
in the first half of 2006, the future performance of its equipment
brokerage business and lifecycle management services businesses,
Somera's ability to capitalize on business opportunities in light
of its reorganization efforts, and Somera's ability to gain new
customers, expand its programs with existing customers in future
periods and make progress in positioning itself for improved
performance. Actual results in future periods are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected in the forward-looking statements
contained in this release, including, but not limited to, general
economic conditions particularly affecting the telecommunications
industry; capital equipment spending levels in the
telecommunications industry, including the risk of continued
customer spending delays associated with carrier consolidation; the
impact of competition in the market for supplying equipment and
equipment lifecycle management services to telecommunications
operators; the risk of potential shortage of product supply; and
Somera's ability to build its lifecycle management services
capabilities; and other factors fully described in the company's
reports to the Securities and Exchange Commission (SEC), including
but not limited to, the Annual Report on Form 10-K for the fiscal
year ended December, 31, 2004, and Quarterly Reports on Form 10-Q.
The company does not undertake to update any forward-looking
statements that may be made by or on behalf of the company. Copies
of Somera's Securities & Exchange Commission filings may be
obtained by contacting Financial Relations Board at 617-520- 7064
or by visiting the Investor section of Somera's web site at
http://www.somera.com/. SOMERA COMMUNICATIONS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
(unaudited) June 30, December 31, 2005 2004 ASSETS Current assets:
Cash and cash equivalents $4,852 $7,654 Short-term investments
22,473 32,757 Accounts receivable, net of allowance for doubtful
accounts of $552 and $574 at June 30, 2005 and December 31, 2004,
respectively 14,651 16,217 Inventories, net 11,209 10,027 Other
current assets 2,599 1,876 Total current assets 55,784 68,531
Property and equipment, net 4,468 4,600 Other assets 2,874 148
Goodwill -- 1,760 Intangible assets, net 17 50 Total assets $63,143
$75,089 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $13,893 $12,396 Accrued compensation 2,028 2,503
Other accrued liabilities 9,163 11,139 Deferred revenue 188 723
Total current liabilities 25,272 26,761 Commitments and
Contingencies (Note 5) Stockholders' equity: Preferred stock
($0.001 par value per share; authorized 20,000 shares, no shares
issued) Common stock ($0.001 par value per share; authorized
200,000 shares, shares issued and outstanding: 50,232 and 49,872 at
June 30, 2005 and December 31, 2004, respectively) 50 49 Additional
paid-in capital 75,155 74,652 Unearned stock-based compensation
(221) (72) Accumulated other comprehensive loss 204 (191)
Accumulated deficit (37,317) (26,110) Total stockholders' equity
37,871 48,328 Total liabilities and stockholders' equity $63,143
$75,089 SOMERA COMMUNICATIONS, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (in thousands, except per share data)
(unaudited) Three Months Six Months Ended Ended June 30, June 30,
2005 2004 2005 2004 Revenues: Equipment revenue $16,201 $22,748
$35,005 $45,760 Service and program revenue 2,480 3,019 4,210 8,395
Total revenues 18,681 25,767 39,215 54,155 Cost of revenues:
Equipment cost of revenue 11,092 16,833 23,058 34,589 Service and
program cost of revenue 1,319 1,947 2,199 6,099 Total cost of
revenues 12,411 18,780 25,257 40,688 Gross profit 6,270 6,987
13,958 13,467 Operating expenses: Sales and marketing 6,801 5,919
12,631 11,558 General and administrative 4,306 4,975 9,296 9,623
Impairment of goodwill 1,760 -- 1,760 -- Other operating expenses
1,187 17 1,204 34 Total operating expenses 14,054 10,911 24,891
21,215 Loss from operations (7,784) (3,924) (10,933) (7,748) Other
income (expense), net (136) 56 (250) (150) Loss before income taxes
(7,920) (3,868) (11,183) (7,898) Income tax provision (benefit) 11
8 24 34 Net loss (7,931) (3,876) (11,207) (7,932) Net loss per
share: basic and diluted $(0.16) $(0.08) $(0.22) $(0.16) Weighted
average shares: basic and diluted 50,210 49,759 49,988 49,639
DATASOURCE: Somera Communications CONTACT: Tricia Ross of Financial
Relations Board, +1-617-520-7064, , for Somera Communications Web
site: http://www.somera.com/
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