Jul 29, 2005 1:28 PM,

ECI Telecom up 26%, looks to IPTV future

By Tim McElligott

Israel’s ECI Telecom reported a 26% increase this week in second-quarter revenues as it generated $153 million. The company also announced a contract with a major European carrier to deliver IPTV services.

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“This [IPTV] trend will be driving forth the broadband market in the next few years and will be a great opportunity for ECI,” said Doron Inbar, president and CEO of ECI Telecom.

Net income for the company rose to $15.6 million. As part of the $88 million all-cash acquisition of Laurel Networks, ECI incurred a $0.9 million charge for in-process research and development while Laurel incurred a loss for the period of $2.3 million.

ECI's net profit for the quarter totaled $11.4 million, or $0.10 per share, compared with net loss of $3.5 million, or $0.03 per share, for the second quarter of 2004 and net income of $10.4 million, or $0.09 per share, in the first quarter of 2005.

The Broadband Access Division grew by 24% to $63 million from last year’s second quarter and was flat compared to the previous quarter. Operating income also grew from $5.3 million last year to $6.4 million, but was down from last quarter’s $8.5 million.

The Optical Networks Division revenues grew by 34% to $82 million. More important, the division’s operating income of $8.9 million far exceeded last year’s $1.1 million and surpassed last quarter’s $4.9 million.

Optical demand for the company continued on an upward trend based on the strength of its Multi-Service Provisioning Platform, which is being used for the deployment of cellular backhaul in countries such as Russia, Ukraine, India and throughout Europe.

“Our target, excluding the acquisition [of Laurel], is to bring the company to 10% operating profitability by early next year. We remain firmly on track to achieve that,” Inbar said.

Veraz Networks, a 43% owned subsidiary of ECI announced that India’s largest private telecom provider will its I-Gate 4000 PRO media gateways to support 60,000 ports for international long-distance voice-over-IP traffic.