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Friday, July 26, 2002 |
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Eagle declares Victory
as its first Riverstone hit with class action lawsuit Sonera bids farewell to 3G, at least for now Edward Breen is on the move, but is he going from the frying pan into the fire? Less than a year after taking over as chief operating officer at Motorola Inc., Breen is leaving the company to take up the CEO post at embattled Tyco International Ltd. Breen was heir-apparent to the Motorola throne when Christopher Galvin decided to step down as the company's chief executive, but he has decided to seize another opportunity. "This is the opportunity of a lifetime," Breen said in a statement. "Tyco and its employees have successfully weathered a very difficult few months, and I am confident that we will put the current issues behind us and begin to forge ahead." Five weeks ago, then-Tyco CEO Dennis Kozlowski resigned his post just before he was indicted for allegedly not paying $1 million in sales tax for artwork purchases. The company has been plagued by accounting worries ever since -- according to circulating rumors, a bankruptcy filing could be in the company's future. Nonetheless, Breen is committed to his new task at hand. He plans to develop an action plan that will restore confidence in Tyco with its employees, suppliers, customers and the financial community, he said. News of Breen's departure sent Motorola shares sliding. The company's stock had shed $1.20, or nearly 10 percent, to $10.98 as of 11:06 a.m. EDT. Meanwhile, Tyco's stock is skyrocketing, up nearly 37 percent to $11.27 as of 11:07 a.m. EDT. Motorola has wasted no time in naming Breen's successor. Mike Zafirovski, currently executive vice president and president of Motorolas Personal Communications Sector, will take over as president and chief operating officer when Breen departs on Monday, July 29. Related stories:
Eagle declares Victory as its first
Eagle Broadband is marching full-speed ahead with its fiber-to-the-home initiative. Texas' Victory Lakes master-planned community will be the company's first all IP-based community. Eagle Broadband has completed its basic FTTH installation and is getting started on the delivery of Bundled Digital Services to the community, which sits 30 miles south of Houston. Eagle Broadband already has given Victory Lakes homeowners access to fiber-based high-speed Internet connectivity, digital television, local and long distance telephone service and security monitoring. By initiating Phase II of its build out, Eagle will soon enable the delivery of more than 200 channels and full video-on-demand capabilities. Eagle Broadband recently inked a deal with Warner Home Video to access Warner Home Video's first-run feature movies, library content and live events for VOD distribution over Eagle's IP-based fiber network. The Victory Lakes community will be the first to gain access to the Warner Bros.'s content. Eagle Broadband has contract with six other master-planned communities to deploy its FTTH architecture and BDS package. It is the company's goal to offer full IP services in communities where it has deployed its BDS package. Earlier this week, Eagle Broadband posted a comprehensive loss of $2.4 million, or 4 cents a share, including an unrealized holding gain of $208,000 in the latest quarter. Including an unrealized holding loss of $1.2 million in the year-ago quarter, the company's comprehensive loss was $2.9 million, or 4 cents a share. Related stories:
Riverstone hit with class action lawsuit Metro networker Riverstone Networks is the subject of a class action lawsuit filed in a California court yesterday. The suit, filed in the U.S. District Court for the Northern District of California, alleges Riverstone issued a series of false and misleading statements concerning the company's financial condition and sales. Specifically, Riverstone Networks did not disclose the "true effect" that the downturn in telecom spending had on the company, according to the lawsuit. Law firm Stull, Stull & Brody have filed the class action suit on behalf of those who purchased Riverstone securities between Aug. 20, 2001 and June 5, 2002. The suit seeks to recover unspecified damages. Riverstone Networks could not be reached for comment before deadline. Stull, Stull & Brody also has filed class-action suits against several companies, including EarthLink Inc., Salomon Smith Barney, Inc. and its star telecommunication research analyst, Jack Grubman, in relation to the WorldCom scandal. Related stories:
Sonera bids farewell to 3G, at least for now It doesn't seem that long ago that European operators were shelling out billions for next-generation wireless licenses, in hopes of becoming the top dog in the 3G market. With the economy lagging, however, reality is starting to set in, leaving some companies to reevaluate their commitment to 3G. Finland's Sonera and Spain's Telefonica have decided to put their 3G network plans hold. In August 2001 Group 3G, a start-up operator owned by Telefonica and Sonera, was announced, said it planned to spend $5.4 billion on a 3G network over the next 10 years. Group 3G had signed an interconnection agreement with DT so that its customers can make and receive calls from other fixed and wireless sources. It also had a roaming agreement with Germany's third largest wireless operator, E-Plus, which is owned by Dutch provider KPN and BellSouth Corp. KPN Telecom has said despite Sonera's and Telefonica's pull out, it still expects to launch 3G services next year. Sonera has said increased capital costs and delays in 3G wireless technology have forced it to halt its network plans. In the second quarter, Sonera took a $4.23 billion charge to write off the value of its investments in Group 3G and IPSE 2000, its similar joint venture with Telefonica in Italy. In March, Sonera announced plans to merge with Sweden's Telia. Under the terms of the deal, Telia's shareholders will own roughly 64 percent of the combined company, while Sonera shareholders would get 34 percent. Related stories:
As the demand for optical networking gear continues to wane, JDS Uniphase Corp. said it is trimming is its first-quarter outlook. The optical networking gear provider expects to post an 8 percent sequential decline in first-quarter sales. For the fourth quarter ended June 30, JDs posted revenue of $222 million, a 63 percent drop from the $601 million recorded in the same quarter a year ago. The company reported a loss of $997 million, or 73 cents a share. Excluding special items, JDs posted a loss of $140 million, or 10 cents a share, which is a dramatic drop from the Q4 loss last year of $528 million, or $6.47 a share. The company has named Syrus Madavi president and chief operating officer. Madavi comes to JDs from the chip industry where he has held executive positions at Texas Instruments and most recently ON Semiconductor. He will replace Gregory Dougherty, who left the company to care for a sick family member. The company also said Anthony Muller will retire at the end of the first quarter. JDs has not yet found a replacement. As of 12:19 p.m. EDT, JDs shares were down 40 cents to $2.13, falling below its previous 52-week low of $2.24. Shares of the company's competitors also dipped slightly in midday trading. Nortel Networks and Lucent Technologies' stock prices were down 3 percent and 8 percent respectively. Related story:
Corning Inc. has a number of auctions in the works to raise cash and help reach profitability by 2003, sources said Thursday. Optics analyst Jim Jungjohann at CIBC World Markets said Corning, the world's largest maker of optical fiber and cables, is selling Corning Gilbert, its connector business. The unit could fetch more than $100 million, he said. Connectors plug electronic devices together. They are a critical, if mundane, part of electronics manufacturing. Hasan Imam, a partner with Thomas Weisel Partners LLC in San Francisco, said that the company is also trying to sell its optical components business, which analysts value at about $50 million. Corning wants to sell the unit because it is "difficult to justify the R&D spending that Corning would have to continue to sink into this business and the excess manufacturing capacity on its books," Imam said. "The business was not profitable even at the peak of the market." In a conference call with analysts Wednesday, Corning Chief Financial Officer James Flaws said the company will sell or discontinue production of non-core product lines if telecom spending continues to deteriorate. "We'll spare no sacred cow in bringing us back to profitability," he said. On Tuesday Corning reported a loss of 39 cents per share for the quarter ended June 30 and cash of $1.3 billion, down from $1.8 billion sequentially. Corning this week canceled plans to build an optical fiber plant in Oklahoma City and decided against expanding another plant in Concord, NC, in attempts to cut costs. But Flaws said that if telecom spending continues to decline, the company must accelerate cost-cutting initiatives further to reach profitability next year. "We are unwavering in our commitment to profitability next year," he said. Max Schuetz, an optical component analyst with Credit Suisse First Boston, said Corning has a better chance selling its connector business than its optical components unit. "Gilbert probably generates cash, and if it can be acquired at a decent price the business is cyclical enough that there will be upside to its earnings when the recovery comes," he said. Jungjohann said possible bidders for the connector business include Andrew Corp. an Orland Park, Ill., wireless device maker that made two acquisitions this spring; Hickory, N.C.-based cable maker CommScope Inc.; and Wallingford, Conn.-based connector manufacturer Amphenol Corp. Corning's controls and connectors product unit generated $33 million in revenue in the quarter ended June 30. In the company's quarterly filing Wednesday, Corning said it sold its appliance controls group, part of the controls and connectors business, to New York private equity firm Jacobson Partners in May for $24 million in cash and note proceeds of $6 million. Completing a sale of the optical components business could be tough. The unit makes optical amplifiers, for which there is little demand, Jungjohann said. He estimates the division generated about $13 million in the June quarter and that, as of spring quarter, its revenues have fallen 96 percent from the year-earlier period. Schuetz said Corning is more likely to shutter the optical components business than to sell it, noting that inventories for optical components remain high. Possible bidders for the unit will likely be limited to financial buyers, analyst said. Related story:
Cablevision reaffirms guidance WorldCom denies knowledge of possible indictments "We have been advised the (state and federal law enforcement) authorities are satisfied with WorldCom's cooperation to date," WorldCom spokesman Brad Burns said in a statement. Airspan inks wireless broadband deals Separately, Broadcast Communications Ltd. has tapped Airspan's wireless DSL technology to bring broadband access to rural residences and businesses in New Zealand. Broadcast Communications will use the technology as a supplement to Telecom New Zealand's ADSL network.
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