Riverstone Q2 loss larger than forecast

Riverstone Networks Inc. this week reported a deeper second quarter loss than forecast a month ago on revenue in line with that pre-announcement.

For the period ended Aug. 31, Riverstone posted a pro forma loss of US$0.31 per share on revenue of $10.7 million. The loss is more than double that of the first quarter.

Last month, the company warned that second-quarter revenue would fall between $10 million and $15 million, but that the per-share loss would be $0.18 to $0.24. Analysts polled by Thomson were expecting a $0.21 per share loss.

Revenues are down 80 percent from the year-ago period and 65 percent sequentially.

The company reduced its workforce from 475 people to 350.

Riverstone cited the continuing weakness in telecom and projects timelines that have been pushed out or tabled by carriers.

"These results are disappointing to us," said Riverstone CEO Romulus Pereira in a teleconference with analysts. "This is the most disappointing quarter for us."

On the upside, Pereira said the company is encouraged by the five trials its product are in with cable MSOs, and by interest in Ethernet and MPLS as broadband aggregation alternatives to ATM, frame relay and SONET. Riverstone's metro routers specialize in Ethernet aggregation.

Pereira said during last month's warning that Riverstone will now focus more intently on the cable MSO and enterprise markets, specifically government, while the company's traditional service provider customers work through the current downturn.

Riverstone provided no guidance for the current or subsequent quarters, or for fiscal 2003 as a whole.

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