NEW YORK-DSC Communications Corp., a major manufacturer of switches for wireless and wireline telecommunications, announced it anticipates posting disappointing revenues and earnings for the third quarter ending Sept. 30.
The company expects total revenue for the quarter to be between $325 million and $335 million, with quarterly earnings at a break-even point before an after-tax special charge of $60 million. The special charge is associated with stocking up on the inventory of several new products, whose shipment delays helped hurt the third quarter bottom line.
Early this year, DSC advised investors it expected the second half of 1996 to improve after a slow start to the year that was largely attributable to a slowdown in orders for cellular switches from its biggest customer, Motorola Inc.
“This quarter’s financial performance has been an obvious disappointment,” said James L. Donald, chief executive officer of the Plano, Texas-based company. “Specifically, deliveries of more mature products, including cellular switching and optical access systems, were negatively impacted by delays in customer decisions regarding digital radio for cellular (as well as) broadband applications for access.”
Those decisions, in turn, were affected by general uncertainty in the telecommunications industry caused, Donald said, by pending Federal Communications Commission rulemaking procedures, court challenges of the new federal telecommunications law and mergers and acquisitions among DSC customers.
Another key factor Donald cited was DSC’s delay in volume shipping of its new products, including: Airspan, a fixed wireless loop solution; Litespan-120, an international loop access product, and iMTN, a next-generation digital cross-connect.
To bolster its sales abroad, DSC also announced it had restructured its internal management, placing key people into a newly created international group led by Philip A. Wilkinson, senior vice president.
“As we look forward to the remainder of 1996 and into 1997, we are cautious regarding our expected level of performance,” Donald said. “Recognizing this, we will adopt a cost structure designed to allow the company to return to acceptable levels of profitability while balancing the need to meet long-term objectives.”
