SANTA CLARA, Calif., April 6 /PRNewswire/ -- FVC.COM (Nasdaq: FVCX) today
announced that revenues for the first quarter of 1999 are expected to be
significantly below analyst expectations with a significant loss for the
quarter. The Company anticipates that revenues will be between $8.0 and
$8.5 million, and the net loss per share will be between $0.20 and $0.22.
The Company attributed the drop in revenues to a combination of factors,
including a significant decline in business through its major OEM partner, Bay
Networks, now a part of Nortel Networks. Bay Networks has been FVC.COM's
largest customer for the last several years. Negotiations during the quarter
to restructure the companies' relationship resulted in a significant reduction
in joint sales activity. Sales to Bay/Nortel fell to approximately 25 percent
in the first quarter, compared with approximately 43 percent as previously
reported for the fourth quarter of 1998. In addition, the Company stated that
Nortel has indicated its intention to move from stocking inventory to having
FVC.COM drop-ship to Nortel's customers.
In order to reflect this change, CEO Rich Beyer, who joined the Company in
January of this year, stated that the Company will now record its sales to
Nortel on a sell-through basis and has implemented this change effective
December 31, 1998. Therefore, FVC.COM is reducing its previously announced
revenues for the quarter ended December 31, 1998 by approximately $7.0 to
$7.5 million to defer the revenue on inventory of FVC.COM products held by
Nortel on December 31, 1998. Such revenues under the revised policy are now
being recognized as and when such products are sold by Nortel. Sales for the
fourth quarter 1998 are being revised to approximately $4.7 to $5.2 million;
earnings per share will be revised accordingly to a net loss per share of
approximately $0.20 and $0.22.
Commenting on the announcement, Beyer said, "We are confident in the
future prospects for the Company. In the first quarter, our business with
non-Nortel partners grew approximately 25 percent year-on-year, we broadened
the base of our distribution channel, we enhanced our product offerings, and
we have continued to strengthen our leadership position in the enterprise
video networking market. I believe that we have taken prudent financial steps
to make FVC.COM a much healthier organization over the long-term, and to place
the Company in a much better position to scale for future growth."
Separately, as previously announced, the Company has recomputed the
in-process research and development charge (IPR&D) for its acquisition of
ICAST. In accordance with new SEC guidelines, the Company has reduced its
estimate of the amount allocated to IPR&D in the ICAST acquisition by
$1.5 million, from $6.2 million to $4.7 million. The incremental impact will
be $87,000 per quarter, bringing the total charge for goodwill and other
purchased intangibles to approximately $130,000 per quarter beginning the
fourth quarter of 1998 and each quarter going forward for five years.
In view of the slower than expected growth of first quarter revenues and
the uncertainty of timing in some major projects, FVC.COM is taking a more
cautious view of its near-term growth and will be lowering its internal
forecast for the year. Revenues are expected to continue to grow throughout
the remainder of the year, although at a slower pace than anticipated earlier.
Actual results for the quarter are expected to be released on Tuesday,
April 13th.
About FVC.COM
FVC.COM is the world leader in enterprise video networking. Founded in
1993 by technology pioneer Ralph Ungermann, FVC.COM manufactures and supports
a broad family of interactive video, streaming video and multi-service access
products. Designed for high-quality video delivery, integrated with voice and
data, these products enable applications such as distance learning, corporate
communications, virtual meetings and telemedicine. With unique expertise in
video over broadband, IP, and legacy networks, FVC.COM delivers all types of
video across enterprise Intranets and the Next Generation Internet (NGI). The
NGI is the new multi-service broadband Internet, being deployed today by
service providers and enterprises.
FVC.COM's OEM, distribution, and system integration partners include Bell
Atlantic Network Integration, British Telecommunications plc, EDS, France
Telecom, IBM, Lucent Technologies, NEC, Nortel Networks, PictureTel, and other
leading companies worldwide. Further information about the Company is
available at http://www.fvc.com.
Cautionary Statement
Except for the historical information contained herein, this news release
contains forward-looking statements, including, without limitation, statements
containing the words, "believes," "anticipates," "expects" and words of
similar import. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others: the Company's limited operating history and variability
of operating results, market acceptance of video technology, dependence on ATM
backbone technology and the Next Generation Internet, potential inability to
maintain business relationships with distributors and suppliers, rapid
technological changes, competition in the video networking industry, the
importance of attracting and retaining personnel, management of the Company's
growth, consolidation and cost pressures in the video networking industry,
dependence on key employees and other risk factors referenced in the Company's
Registration Statement on Form S-1, File No. 333- 38755, declared effective on
April 29, 1998.
SOURCE FVC.COM
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Related links:
http://www.fvc.com
CONTACT:
Elyse Phillips, Director, Corporate
Communications of FVC.COM, 408-567-7230, General Information, Don
Markley, or Analyst, Kristi Larson, 415-986-1591, both of The
Financial Relations Board
NOTE TO EDITORS: For more info on FVC.COM via fax at no
additional cost, please dial 1-800-PRO-INFO, ticker symbol FVCX
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