Copper Mountain CEO: Challenges will increase

The DSL (digital subscriber line) provider posted a loss of $91,000, or breakeven on a per-share basis, on sales of $47 million. But it also warned that its first-quarter sales will plummet to between $8 million and $10 million.

First Call's consensus expected Copper Mountain to break even in the quarter.

Earlier in the quarter, the Palo Alto, Calif.-based company warned investors it would miss its already reduced sales estimates, citing weakness in the competitive local exchange carrier (CLEC) customer base.

The company had previously warned that it would post sales of around $60 million in the quarter before lowering that forecast to between $46 million and $49 million.

Copper Mountain shares closed up 13 cents to $7.81 ahead of the earnings report before falling to $6.52 in after-hours trading.

The $47 million in sales represents a 6 percent improvement from the year-ago quarter when it earned $6.7 million, or 12 cents a share, on sales of $44.6 million.

In the quarter, it posted a net loss of $34.4 million, or 66 cents a share, compared with a net profit of $6.3 million, or 11 cents a share, in the same period last year.

For the fiscal year, it pocketed $41.3 million, or 71 cents a share, on sales of $281.6 million compared with a profit of $15.2 million, or 29 cents a share, on sales of $112.7 million.

Chief Executive Rick Gilbert told analysts the company's "challenges will increase in 2001," adding that it expects a significant sequential decline in total sales.

Company executives told analysts to expect sales between $8 million to $10 million in the first quarter.

First Call consensus was expecting sales of $50.9 million in the first quarter.

Frank McEvoy, an analyst at USB Piper Jaffray, said that $8 million figure would translate into a loss of around 26 cents a share in the quarter, well below the break-even mark analysts were expecting.

"This is a reflection of what's going on in the data CLEC space," he said. "They need to try to diversify their customer base. It's not easy to do, but Copper Mountain has to get into the ILEC space if it wants to turn things around."

Copper Mountain executives didn't give any guidance for sales or earnings for the rest of 2001 during a conference call with analysts.

"Unfortunately, because of these rapidly changing conditions, we have very limited visibility on our customers' future buying patterns at this time," Gilbert said.

Copper Mountain also took a $35 million charge in the quarter for inventory write-downs, $28.6 million of which is related to future inventory purchase commitments.

Last quarter, it met analysts' estimates when it posted a profit of $15.8 million, or 27 cents a share, on sales of $93.5 million.

The stock moved as high as $125.69 in July before collapsing to a low of $4 a share in December.

Six of the 10 analysts tracking the stock rate it a "hold."