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Sycamore reports loss in third quarter

Ela Dutt
India Abroad Correspondent in Washington

Billionaire Gururaj 'Desh' Deshpande's Sycamore Networks, Inc (NASDAQ: SCMR), an optical networking company, has reported a loss in its third-quarter results for the period ended April 28, 2001.

Revenues for the third quarter of fiscal 2001 were $54.2 million, compared with $59.2 million in the same period last year. Pro forma net loss, which excludes the amortization of deferred stock compensation, payroll tax on stock option exercises and restructuring costs, was $46.2 million, or 19 cents per share for the third quarter of fiscal 2001, compared with the pro forma net loss of $6.8 million or 2 cents per share for the same period last year.

Actual net loss for the third quarter of fiscal 2001 was $225.1 million or 94 cents per share, compared with actual net loss of $5.7 million or 2 cents per share for the same period last year.

Earlier this month, Deshpande, who is co-founder and chairman of the company, had announced a programme to reduce his work force, consolidate facilities and restructure business functions. Sycamore said that as a result of the restructuring, the company incurred a non-recurring charge of $165.8 million.

Revenues for the nine months of fiscal 2001 were $323.9 million compared with $107.7 million for the first nine months of fiscal 2000. Pro forma net income, which excludes the amortization of deferred stock compensation, payroll tax on stock option exercises, acquisition costs and restructuring costs, was $3.2 million or 1 cent per share for the nine months of fiscal 2001, compared with a pro forma net income of $3.1 million or 1 cent per share for the same nine-month period in fiscal 2000.

Actual net loss for the nine months of fiscal 2001 was $237.5 million or $1.01 per share compared with actual net loss of $6.7 million or 5 cents per share for the same nine-month period in fiscal 2000.

"Sycamore's third-quarter pro forma results were in line with our revised outlook provided in April. We believe that the challenges we face are primarily a result of capital spending and macro-economic issues," said Dan Smith, Sycamore's president and chief executive officer.

"During the quarter, we invested considerable time to realign our resources across the organization. We believe that the actions we have taken will lead to improved near-term financial performance over the third quarter, as well as position us to resume long-term growth as market conditions improve. Although visibility remains restricted, Sycamore's strategic direction is clear."

Sycamore's products and product plans include optical transport, access and switching systems and end-to-end optical network management solutions.

Deshpande established Sycamore in 1998. In the halcyon days of IT companies, Sycamore was named one of the Top 25 Hot Startups (Data Communications magazine), Hot 100 Private Companies (Upside), Top 100 Companies of the Electronic Economy (Red Herring) and both Cool Companies for 1999 and Top 10 Picks for 2000 (Fortune), and Deshpande has been recognized numerous times as a leader and IT visionary.

Sycamore's products received the SuperQuest Award at SUPERCOMM '99 with Williams Communications; the Communications Equipment Award in the Top Ten Hottest Technologies for 1999 from Upside; and the Top Ten Hottest Technologies from Telecommunications magazine.

Prior to co-founding Sycamore, Deshpande founded Cascade Communications in 1990 with a vision to create a new public network for global computer connectivity. Between 1991 and 1997, it grew from a one-person startup to a company with $500 million in revenue and 900 employees. Cascade was named one of the Top 25 Very Cool Companies (Forbes, 1996). In June 1997, it was acquired by Ascend Communications for $3.7 billion.

Deshpande has a BS in electrical engineering from the Indian Institute of Technology, Madras, an ME in electrical engineering from the University of New Brunswick in Canada and a PhD in data communications from Queens University in Canada.

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