Agere moves towards break-even point: News from Agere Systems

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Agere Systems has reported revenues of $456 million for its third quarter of fiscal 2003, ended 30th June, up 3% from revenues in the March quarter. Revenues in the year-ago quarter from the company's continuing operations were $498 million. Net loss on a reported or GAAP basis for the June quarter was $78 million or $0.05 per share, an improvement of $47 million, or 38%, over the March quarter, and an improvement of $254 million, or 77%, from the year-ago quarter.

Pro forma net loss was $74 million, or $0.04 per share in the June quarter.

This was an improvement of $31 million, or 30%, from the March quarter, and an improvement of $34 million, or 31%, from the year-ago quarter.

Pro forma net loss excludes gain or loss from the sale of, and income or loss from, discontinued operations; net restructuring and other charges; amortization of goodwill and other acquired intangibles; net gain or loss from the sale of operating assets and cumulative effect of an accounting change.

Cash and cash in trust at the end of the June quarter increased by $4 million sequentially to $749 million, with $566 million in excess of short-term debt, and $101 million in excess of total debt.

Cash used in operating activities and capital expenditures was $39 million, which included $33 million used for restructuring and related activities and $7 million used in discontinued operations.

The company's ongoing operations generated a positive cash flow of $1 million in the June quarter.

"We are pleased with the continued improvements in our financial performance", said John Dickson, President and CEO, Agere Systems.

"We grew our revenues for the second straight quarter and reported positive cash flow from ongoing operations.

We have now essentially completed our manufacturing consolidation plan, and have reduced our net loss every quarter during the fiscal year.

Going forward, our continued investments and market penetration in key areas such as storage SoCs, mobile terminals, ATM, Sonet/SDH and storage area networking segments should position us for success as our end markets gain momentum".

"We remain focused on achieving positive net income on a GAAP basis in the September quarter", said Dickson.

"We recognise, however, that volatility in Asian markets will pose a challenge, and are therefore guiding to a net income of about break even, plus or minus $0.01 per share, for the fourth fiscal quarter".

The company expects revenues in the September quarter to be up approximately 5 to 8% from the June quarter.

Revenues for the full fiscal year 2003 are expected to be in the range of $1.81 to $1.83 billion, slightly lower than the company's previous guidance of $1.85 billion.

The company expects reported net income to be about breakeven with a range of plus or minus $0.01 per share, which would be an improvement of $0.04 to $0.06 sequentially.

For the full fiscal year, the company expects a net loss of $0.20 to $0.22 per share.

On a pro forma basis, the company also expects net income to be about breakeven, with a range of plus or minus $0.01 per share, in the fourth fiscal quarter.

Pro forma net loss for the full fiscal year is expected to be in the range of $0.17 to $0.19 per share.

The company expects to end the September quarter with over $750 million in cash and cash in trust, and expects to report positive cash flow, including all operations and restructuring, exclusive of any financing.

The company notes that it is not certain whether or not it will be required to take a non-cash pension settlement charge in the fourth fiscal quarter, and the company's guidance excludes any impact of such a charge.

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