CHARLOTTE, N.C.-Glenayre Technologies Inc. announced its second-quarter results were affected by an unexpected drop in sales and manufacturing problems.
Net income was reported at $77,000, or 0 cents per share, down from $14.9 million, or 22 cents per share, last year.
Net sales fell 26 percent to $81.9 million, from $110.2 million the previous year. Loss from operations was $1.4 million, compared with a profit of $21 million in the second quarter of 1997.
Besides the depressed financial situation in Asia, which led to substantially lower sales there, Glenayre said four factors delayed production until late in the quarter and blocked shipment of some $30 million to $40 million in orders.
First, the company said an unusually large number of paging infrastructure orders came in late in the quarter, which the company was unable to process due to manufacturing constraints in late June. Second, a slow rollout of the new modular voice processing (MVP) platform harmed both mobile and fixed network product revenues. Third, the new AccessMate pager, made by Glenayre’s Wireless Access Group, suffered startup manufacturing problems. Finally, Glenayre had problems ordering parts because of complications with implementing new business systems, said the company.
“Ultimately, we did not convert these orders into shipments in the quarter,” said Gary Smith, Glenayre president and chief executive officer.
He made assurances the manufacturing problems are being addressed and the company is working to increase its peak manufacturing capacity. Smith named three areas in which the company is looking to improve.
First, Glenayre is spending about $1 million in capital expenditures to eliminate bottlenecks in its surface mount board assembly area, which caused delays last quarter. The company also hired more test technicians and increased the size of its temporary work force pool in anticipation of future crunch times.
Second, Smith said the company has bought more safety stock for “certain critical components” to avoid a shortage of parts. Finally, the company will preproduce certain subassemblies it deems necessary to provide greater production flexibility.
“We will work more closely with our customers to anticipate special product configurations,” Smith said. He added the company believes overall sales will increase more than 40 percent during the second half from the first half.
