TTI Team Telecom International (Nasdaq: TTIL) today warned that it expected to record a sharp decline in revenue and profit for the third and fourth quarters of 2002.
“Globes” reported last week that TTI was about to publish a profit warning.
The company, which develops operations support systems and network management systems for the telecom industry, also announced a 6% reduction in its workforce. 40 employees, across all departments, will lose their jobs. The company will also implement a salary reduction, effective immediately.
TTI Telecom CEO Meir Lipshes said, "The further deterioration of the telecom capital spending environment, combined with lengthening sales cycles as service providers take longer to make purchasing decisions, has resulted in contracts expected this quarter to be pushed into the next quarter. We remain optimistic, however, in closing these opportunities in the near future."
TTI now expects revenue for the third quarter 2002 to be $11.5 - $12.5 million, with a net loss of $3.6 - $4.4 million, or a per share loss of $0.31 to $0.38. For the fourth quarter, the company anticipates revenue in the range of $16 - $19 million, and a return to profitability with a net profit in the range of $1 - $3 million, or a range of $0.08 to $0.24 per share.
For year 2002, the company now anticipates revenue to be in the range of $64.9 - $68.9 million, with a net profit of $6 million - $8.9 million, or $0.50 to $0.74 per share.
Before today’s warning, TTI’s annual forecast for revenue in 2002 stood at over $80 million. Merrill Lynch analyst Ilana Treston, who rated the company “Neutral” before the warning, said she expected revenue of $74.9 million this year.
”We are looking for 2002 and 2003 EPS of $1.40 and $1.47,respectively, below market consensus of $1.47 and $1.60”, she said last week, “The company is trading at 6 times our 2002 and 2003 EPS respectively, below comparables, but uncertainty remains concerning their earnings outlook.”
TTI stated that its workforce reduction was implemented while preserving its core operations in Israel, the UK, the Asia Pacific, Atlanta, Georgia, and New Jersey. The layoffs should not impact the company’s ability to service customers, acquire new ones, or continue existing R&D initiatives, TTI said. The company does not expect to incur a charge relating to the workforce reduction.
TTI also announced that its parent company, TASE-listed Team Computers, had acquired 4% of TTI Telecom shares in the open market, raising its stake in the company to approximately 43%.
TTI Telecom will announce final third quarter 2002 results on November 12, 2002.
TTI trades on Nasdaq at a $80 million capitalization. Its shares closed on Monday at $6.78.
Published by Globes [online] - www.globes.co.il - on 1 October, 2002