Jan 7, 2003 12:00 PM,

Extreme second quarter financial results take a dip

Jim Barthold

Extreme Networks’ financial results dropped off in the second quarter, and, despite unfavorable market conditions in a brutally slumping market segment, company executives weren’t offering excuses during yesterday’s conference call.

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Extreme reported net revenue of $90.2 million, compared to $100.6 million for the first quarter, resulting in a net loss of $19.7 million, or 17 cents a share versus $4.7 million, or 4 cents a share loss in the first quarter.

“We’re not satisfied with the marketplace or financial performance that we achieved over the past two quarters,” said Gordon Stitt, the broadband networking company’s president and CEO.

Stitt said neither market conditions nor Extreme’s competition had changed in the last several quarters, although networking is a “very difficult environment in both the enterprise and metro segments.”

To combat the slide, the company cut employees, realigned its sales force, consolidated its supply chain and enhanced its third generation of products in hopes of making those products the keystones of a 2003 turnaround.

“Calendar year 2003 is going to be all about new products and this will be a driver for growth,” Stitt said.

Ethernets primary customers are large enterprises and metro Ethernet service providers. Its third-generation products, scheduled for release in the first half of this calendar year, will increased voice-over-IP [VoIP] support and enhanced security while continuing a trend toward product modularity, he said. By year-end, Stitt said, Extreme plans to introduce fourth generation technology aimed at the “very largest enterprise customers and Ethernet metro service providers.”

Much of the company’s product focus, he said, will include the 10 gigabit Ethernet marketplace.

“This is a market that will build throughout the year and become an important part of our business,” he said. “You can expect solutions for critical enterprise applications such as voice-over-IP and media streaming and you can expect software to differentiate Extreme.”