Efficient Networks crushes estimates, ups profit target

Efficient Networks (Nasdaq: EFNT) easily topped Wall Street estimates in its fiscal fourth quarter and said it will be profitable a quarter ahead of schedule.

On Tuesday, the maker of broadband access devices reported a fourth quarter operating loss of $1.8 million, or 3 cents a share, on sales of $101.9 million. First Call Corp. projected a loss of 15 cents a share. The results didn't include charges.

Including stock compensation and acquisition charges, the company reported a net loss of $49.6 million, or 91 cents a share, in the June quarter. The bulk of the charges related to the acquisitions of FlowPoint Corp. in December and Network TeleSystems in May.

The results were a dramatic improvement sequentially. Sales were up 65 percent from the third quarter ending March 31, enabling the company to pare its losses. Efficient said its sales were up 1,223 percent over revenues of $7.7 million a year ago.

Efficient said its strong growth will enable it to become profitable a quarter ahead of schedule. In a statement, Efficient Networks CEO Mark Floyd said the company will post operating profits in the quarter ending Sept. 30, or the first fiscal quarter of 2001. First Call projected profits for the December quarter.

The company, which primarily caters to the digital subscriber line (DSL) market, said a boom in installations has fueled growth. SBC Communications (NYSE: SBC) placed a substantial order in the quarter.

Although the growth is strong, Efficient's revenue base could use a little diversification. Shipments into the networks of SBC Communications and Covad Communications and of Hanaro Telecom in Korea each accounted for more than 10 percent of sales for the fourth quarter. The company's top 10 customers represented 93 percent of total revenue the fourth quarter.

Efficient said it is working to expand its customer base and plans to boost sales abroad. In the fourth quarter, 24 percent of sales came from international customers.

For the fiscal year, Efficient reported sales of $202.2 million, and a net loss of $130.4 million, or $3.06 per share.