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ONI beats estimates with new contracts

The optical-networking start-up beats quarterly earnings estimates on the strength of several new customer contracts and higher profit margins for its network equipment.

    ONI Systems, an optical-networking start-up, today beat quarterly earnings estimates on the strength of several new customer contracts and higher profit margins for its network equipment.

    In its first quarter since going public in June, ONI posted a second-quarter loss--excluding non-recurring items--of $20 million, or 18 cents per share, compared with a net loss of $5.6 million, or 39 cents a share, for the year-ago period.

    Wall Street analysts expected the company to lose 20 cents per share, according to a consensus estimate compiled by First Call/Thomson Financial.

    Revenue for the quarter ended June 30 rose to $9.5 million, up from $400,000 for the same period last year.

    ONI, which manufactures equipment for metropolitan-area, fiber-optic communications networks, added three new unannounced customers during the quarter. The company competes against Nortel Networks, Ciena and Sycamore Networks, among others.

    On a conference call with analysts and news media, executives said revenue was about $3 million higher than expected and should remain higher during the next few quarters. Executives attributed the upside surprise in part to higher-than-anticipated gross profit margins, the result of lower equipment-production costs.

    ONI executives said the company can triple its customer base--ONI now has seven customers--by the end of the second quarter of 2001.

    "We continue to talk to several potential customers about their network needs, and we feel great about getting their business," ONI chief executive Hugh Martin said.