Riverstone Networks said it will begin workforce reductions in anticipation of a disappointing fourth quarter.
The maker of edge and metro routers expects fourth-quarter revenue of between $US50 million and $54 million, resulting in flat pro forma earnings, or a loss. As a result, Riverstone said it would begin laying off an undisclosed number of employees.
The announcement dropped Riverstone's stock almost 50 per cent, to $3.88 a share.
For the third quarter 2001, which ended December 1, the company posted $60.1 million in revenue and pro forma earnings of $3.6 million, or 3 cents per share. Revenues for the fourth quarter of fiscal 2001, ending March 1, were $35.1 million, and pro forma net loss for the quarter was $5.5 million, or 6 cents per share.
Riverstone anticipates about a 10 per cent reduction in its overall cost structure in the first quarter of fiscal 2002, which ends June 1, 2002.
Riverstone also reported that it expects to take charges in the fourth quarter of approximately $26 million to $30 million. These charges consist of asset impairments, write-downs in equity investments, charges related to discontinued products and costs associated with the workforce reductions.
The announcement comes just two months after the company announced its largest metro router deployment: 1000 RS access and aggregation routers around Seoul, Korea, in a contract valued in the multi-millions of dollars.
The contract is the result of service provider PowerComm's attempt to become Korea's first national telecommunications carrier to deploy an all-Ethernet metropolitan area network, which will serve 11 million subscribers. During the quarter, PowerComm announced a multi-million dollar deal with cable operator Cox Communications, which is in the process of deploying hundreds of Riverstone RS 3000 metropolitan access and RS 800 and 8600 multiservice metro routers in all 28 of its US points of presence.