Copper Mountain meltdown: 3Q profit tops estimates, but 4Q, 2001 will be brutal

Copper Mountain beat the Street in its third quarter Tuesday but investors shouldn't get too excited. It also warned that it will miss estimates in the fourth quarter and will reorganize its entire sales unit.

In the quarter, Copper Mountain (Nasdaq: CMNT) posted a profit of $15.8 million, or 27 cents a share, on sales of $93.5 million.

First Call Corp. consensus expected it to earn 26 cents a share in the quarter.

Its shares closed off $3.75 to a 52-week low of $26.88 ahead of the earnings report.

The $93.5 million in sales marks a 192 percent jump from the year-ago quarter when it earned $5.3 million, or 9 cents a share, on sales of $32 million.

"We are very pleased with our financial results and execution for our third fiscal quarter," said CEO Rick Gilbert in a prepared release. "However, in light of recent reductions in capital expenditure forecasts from many of our CLEC customers, we expect revenue and earnings to decline in the fourth quarter of 2000 on a sequential basis."

Copper Mountain now expects to post sales of about $60 million in the fourth quarter, roughly a 35 percent drop from the third quarter.

It sees quarterly earnings coming at between 4 cents to 6 cents a share, woefully short of the current First Call Corp. estimate of 28 cents a share.

It went on to project sales of between $300 million to $330 million in fiscal 2001 and earnings of between 16 cents to 25 cents a share.

Analysts were expecting a profit of $1.37 a share in fiscal 2001.

Company officials said Mike Kelly, its vice president of sales, will retire at year's end and will be replaced by Charles Nieman, who currently serves as assistant vice president of field sales. Mike Staiger, vice president of business development, will be responsible for drumming up business in the ILEC/IXC market.

Last quarter, Copper Mountain posted a profit of $14.2 million, or 24 cents a share, on sales of $80.2 million.

Its shares moved up to a 52-week high of $125.69 in July before falling to Tuesday's 52-week low.

Nine of the 10 analysts following the stock maintain either a "buy" or "strong buy" recommendation.