Glenayre Technologies Inc. shocked analysts and Wall Street last week with first-quarter financial results that beat everybody’s expectations-even its own.
The manufacturer reported first-quarter net income of $1.1 million, or 2 cents per share, compared with a net loss of $1.5 million, or 3 cents per share, reported last year at this time. Although first-quarter net sales of $58.7 million is 4 percent less than the $61.3 million reported in the same quarter last year, Glenayre’s operating results far exceeded the expectations of analysts, who had predicted a 7-cent-per-share net loss and lower net sales. Glenayre itself had not expected to post profitable numbers until the third quarter.
“We are extremely pleased with our first-quarter results,” said Eric Doggett, Glenayre president and chief executive officer in a statement. “To become profitable two quarters ahead of expectations and continue to strengthen our balance sheet as we’ve done shows the strategy we embarked upon last fall is paying off … We haven’t seen this type of financial performance in quite some time.”
He noted in particular the company’s cash-flow, which at $5.8 million is the highest since the third quarter of 1998.
Good news has been in short supply for Glenayre ever since the paging infrastructure market began to dwindle two years ago. Lack of demand for pager infrastructure products and continued manufacturing delays of key paging devices led to dismal financial performance, and the departures of former CEO Gary Smith and Chairman Ray Ardizzone.
Doggett’s arrival heralded an era of dramatic change for Glenayre. The new CEO consolidated the company’s independent divisions into cooperating groups-products, worldwide sales, operations and a consumer products strategic business unit.
He also introduced new product families designed to increase revenues, in particular, the Enhanced Services Product line, which brought in sales of more than $28 million for the first quarter-up 75 percent when compared with first-quarter 1999 EPS sales.
The ESP line includes a prepaid system and the Intelligis modular voice processing system. Intelligis is primarily a voice-messaging feature that includes Constant Touch personal number service, a one-touch call return feature and various unified messaging and voice-activated services.
Not abandoning its paging roots, Glenayre also transitioned to delivering more paging switch technologies and relied less on transmitter products. In a conference call discussing results, Doggett said he expects the paging infrastructure business to stabilize.
“We see exciting dynamics in the wireless data marketplace, which creates opportunities for our two-way infrastructure and device product lines later in the year.”
He also said to expect major product announcements in the third quarter.
