Vyyo Inc., which just a few months ago touted its triumph over the crashing stock market and projected first-quarter revenues of $7.9 million, significantly lowered its revenues for the quarter ended March 31 to less than $1 million, citing reduced orders from system integrators as well as the inability of customers and potential customers to obtain adequate financing.
“Apparently the funding issues for smaller carriers are not limited to the U.S. Carriers around the globe are curtailing equipment and service rollout plans due to a worldwide spending and economic slowdown,” said James McIlree, senior vice president of research with Tucker Anthony Sutro Capital Markets in New York.
Vyyo also projected in January its fiscal 2001 revenues would be approximately $60 million, but adjusted that figure last week to around $20 million. Its breakeven on the pro forma net income level will be delayed until 2002, the company said.
Despite the bad news, Vyyo remained positive.
“We believe that end-user demand for broadband access and the market opportunity for wireless remains strong, despite being limited in the near term by deployment and financing issues,” Vyyo said.
According to Tucker Anthony Sutro, about $4 million of the revenue shortfall came from system integrators and $3 million came from direct sales.
Vyyo also said it has increased the number of the its shares it may purchase under its repurchase program by 6 million shares. The company has repurchased 1.7 million shares to date in the repurchase program, and as of March 31, Vyyo expected to have cash equivalents of about $105 million, or approximately $3 per share.
Vyyo’s confident projections in January were due in part to a major contract the equipment supplier won from WorldCom Inc. in December. WorldCom selected Vyyo to provide hubs and modems for its nationwide multichannel multipoint distribution services network.
At the time, Arnon Kohavi, Vyyo’s senior vice president of strategic relations, said the contract would help the company to meet its financial objectives and “give Vyyo a lot of credibility.”
Now, it is likely WorldCom will delay its rollouts, partly because it and Sprint Corp., the other major holder of MMDS spectrum in the United States, are awaiting the Federal Communication Commission’s report on the possible reallocation of MMDS spectrum for third-generation services.
Although the report is not final, it could shed some light on the FCC’s preference to use either MMDS or military spectrum for 3G, and could have a trickle-down effect on Vyyo and others that depend on MMDS network buildouts for the majority of its business, said McIlree.
Shares of Vyyo closed at $2.25 last Thursday, down 13 cents from the previous day.
