Sonus reports upbeat Q1

Sounding a mellifluous note in what many expect to be an orchestra of discordant first-quarter reports, Sonus Networks posted a healthy 45% sequential sales increase for the first quarter. The company also slightly raised its revenue and profit outlook for the rest of 2001.

The vendor of packet voice switching equipment recorded revenue of $41.5 million, compared to $28.6 million in the fourth quarter of 2000, and posted net income excluding special items of $151,000. Analysts surveyed by First Call/Thomson Financial had expected the company to post a 2¢ per share loss.

Significant customer wins for Sonus in the quarter included Qwest Communications and Time Warner Telecom. Sonus has announced 11 customers to date.

“The business case for shifting investment from legacy equipment to next-generation solutions from Sonus is more compelling than ever,” said Hassan Ahmed, president and CEO.

For the full year, Sonus raised revenue forecasts to between $180 million and $200 million, slightly higher than the previous estimate of $170-190 million. Pro forma earnings per share will be 2-3¢, compared to previous analyst estimates that the vendor would break even.

On a net basis, Sonus lost $82.5 million, or 51¢ per share, due to stock-based compensation, amortization of goodwill and in-process research and development charges related to the acquisition of softswitch vendor Telecom Technologies. That compared with last quarter’s net loss of $16 million, or 69¢ per share.

On the all-important balance sheet, the company’s cash and cash equivalents dropped to $42.8 million from $87.1 million. Accounts receivable decreased slightly, while inventories increased a small amount.

Sonus share prices increased 21% prior to the release of its post-trading earnings release yesterday but gave back about 9% of the gain today to close at $17.71.