PictureTel sees smaller losses ahead, profits in 2001

PictureTel gave its investors a measure of hope Tuesday when it predicted it would reach profitability sometime in 2001. However, between now and then it still expects to post some hefty losses.

Company officials said it expects its third-quarter losses to decline by 25 percent to 50 percent from the second quarter and sees fourth quarter losses down 50 percent sequentially.

This news came on the heels of its disappointing second-quarter earnings report.

In the quarter, PictureTel (Nasdaq: PCTL) posted a loss of $29 million on sales of $61 million.

First Call Corp. consensus expected it to lose 49 cents a share in the quarter.

Including one-time charges, PictureTel lost $38 million, or 93 cents a share.

After the bell Tuesday, the company told Wall Street to expect sales of between $70 million to $78 million and in the range of $75 million to $83 million in the third and fourth quarters, respectively.

Its shares closed unchanged at 4 1/32 Tuesday.

PictureTel said a letter of intent has been received from an unidentified third party to acquire the company's Starlight division, and expected the sale to be completed in the third quarter, subject to completion of appropriate documentation. Terms of the sale were not disclosed.

Earlier Tuesday, COO Lewis Jaffe announced it had successfully placed $22 million of a new series of preferred shares, and secured a $35 million line of commercial credit.

"We now have the funds to support our new 900 Series fully, and take advantage of the many inquiries we have received from customers and dealers," he said in a prepared release.

PictureTel shares peaked at 15 3/16 in March before falling to an all-time low of 1 7/8 in June.

Two of the four analysts following the stock rate it a "buy" while the other two call it a "hold."