Epoch Partners Issues a Research Note on Avanex

Avanex Preannounces Fiscal 3Q01 Again



Apr 11, 2001, 01:00 ET from Epoch Partners, Inc.

    SAN FRANCISCO, April 11 /PRNewswire/ -- Epoch Partners today issued a
 Research Note on Avanex Corporation (Nasdaq:   AVNX). The Research Note, issued
 today by Mark Langley, Senior Analyst, Communications Equipment Subsystems
 with Epoch Partners, discusses Avanex's preannouncement of its fiscal
 third-quarter results. The following are key highlights included in the
 Research Note:
 
     -- Avanex preannounced its fiscal third quarter (for the second time in
 two months), and is now expecting revenues of $30 million and a loss of
 $0.03 per share.  The company will also take a pre-tax charge in 3Q for
 $22 million of excess inventory.
     -- The shortfall was attributed to the slowdown in domestic telecom
 spending and orders for legacy products from larger domestic customers that
 did not materialize.
     -- Avanex plans to implement a cost-reduction program and will take a
 4Q charge for headcount reductions and restructuring. The company also plans
 to cut back on general and administrative (G&A) spending.
     -- Our primary concern for Avanex remains customer concentration. This
 shortfall appears tied to PowerFilter sales to WorldCom, and could reduce
 WorldCom's revenue contribution from 50% of sales to less than 10% in 3Q,
 according to our estimates.
     -- The good news is that Avanex's exposure to China is limited -- it only
 uses a contract manufacturer there. The company has decided on some severe
 cost reductions to leave it better positioned for further uncertainty in the
 event of a prolonged downturn. It is a mixed blessing that customer
 concentration with WorldCom has become less of a concern and that sales of the
 legacy PowerFilter have declined, but this shows that Avanex is willing to
 make its own products obsolete.
     -- Based on our revised estimates, we think Avanex shares are fairly
 valued at this level -- at the upper end of their peer group and in line with
 historical levels. We think much of the bad news is in the stock, though the
 sector remains under pressure as carrier spending remains on hold.
     -- Avanex will announce earnings after the market close on April 24.
 
      Our full note, with detailed analysis of each company, is available free
 at:  www.epoch.com.
 
     Communications Equipment Research Coverage
     Investors can visit Epoch's Web site to read research coverage on the
 following public companies:  Avanex Corporation, Avici Systems, Bookham
 Technology plc, Ceragon Networks, CIENA Corporation, Cisco Systems, Corvis
 Corporation, Endwave Corporation, Finisar Corporation, Floware Wireless
 Systems, Foundry Networks, JDS Uniphase Corporation, Lucent Technologies,
 Netro Corporation, New Focus, Inc., Netro Corporation, Sycamore Networks, and
 UTStarcom, Inc.
     In addition, investors can be added to the Communications Equipment email
 alert system, which alerts investors to new research in the Communications
 Equipment sector.  To be added to this alert system visit
 http://pluto.sparklist.com/scripts/lyris.pl?join=epochcommeq .
     Full research coverage on other companies under coverage by Epoch is
 available for free to investors through the Epoch Web site (www.epoch.com).
     Epoch Partners is a technology-enabled investment bank focused on
 high-growth companies and electronically connected institutional and
 individual investors.
     The information contained herein is based on sources believed to be
 reliable but is neither all-inclusive nor guaranteed by Epoch Partners.
 Opinions, if any, reflect our judgment at this time and are subject to change.
 Epoch Partners does not undertake to advise of changes in its opinion or the
 information. Epoch Partners may perform or seek to perform investment banking
 services for the issuers of securities which are the subject of our Research.
 Most of the companies Epoch Partners follows are emerging growth companies
 whose securities typically involve a higher degree of risk and more volatility
 than the securities of more established companies. The securities discussed in
 the Epoch Partners Research may be unsuitable for investors depending on their
 specific investment objectives and financial situation and needs. No report
 included in the Epoch Partners Research is a recommendation that any
 particular investor should purchase or sell any particular security in any
 amount or at all and is not a solicitation of any offer to purchase or sell
 from or to any particular investor. For additional information that may be
 available on the securities mentioned, please contact Epoch Partners.
 
     Epoch Partners is a member of the National Association of Securities
 Dealers, CRD number 103899.
 
 

SOURCE Epoch Partners, Inc.
    SAN FRANCISCO, April 11 /PRNewswire/ -- Epoch Partners today issued a
 Research Note on Avanex Corporation (Nasdaq:   AVNX). The Research Note, issued
 today by Mark Langley, Senior Analyst, Communications Equipment Subsystems
 with Epoch Partners, discusses Avanex's preannouncement of its fiscal
 third-quarter results. The following are key highlights included in the
 Research Note:
 
     -- Avanex preannounced its fiscal third quarter (for the second time in
 two months), and is now expecting revenues of $30 million and a loss of
 $0.03 per share.  The company will also take a pre-tax charge in 3Q for
 $22 million of excess inventory.
     -- The shortfall was attributed to the slowdown in domestic telecom
 spending and orders for legacy products from larger domestic customers that
 did not materialize.
     -- Avanex plans to implement a cost-reduction program and will take a
 4Q charge for headcount reductions and restructuring. The company also plans
 to cut back on general and administrative (G&A) spending.
     -- Our primary concern for Avanex remains customer concentration. This
 shortfall appears tied to PowerFilter sales to WorldCom, and could reduce
 WorldCom's revenue contribution from 50% of sales to less than 10% in 3Q,
 according to our estimates.
     -- The good news is that Avanex's exposure to China is limited -- it only
 uses a contract manufacturer there. The company has decided on some severe
 cost reductions to leave it better positioned for further uncertainty in the
 event of a prolonged downturn. It is a mixed blessing that customer
 concentration with WorldCom has become less of a concern and that sales of the
 legacy PowerFilter have declined, but this shows that Avanex is willing to
 make its own products obsolete.
     -- Based on our revised estimates, we think Avanex shares are fairly
 valued at this level -- at the upper end of their peer group and in line with
 historical levels. We think much of the bad news is in the stock, though the
 sector remains under pressure as carrier spending remains on hold.
     -- Avanex will announce earnings after the market close on April 24.
 
      Our full note, with detailed analysis of each company, is available free
 at:  www.epoch.com.
 
     Communications Equipment Research Coverage
     Investors can visit Epoch's Web site to read research coverage on the
 following public companies:  Avanex Corporation, Avici Systems, Bookham
 Technology plc, Ceragon Networks, CIENA Corporation, Cisco Systems, Corvis
 Corporation, Endwave Corporation, Finisar Corporation, Floware Wireless
 Systems, Foundry Networks, JDS Uniphase Corporation, Lucent Technologies,
 Netro Corporation, New Focus, Inc., Netro Corporation, Sycamore Networks, and
 UTStarcom, Inc.
     In addition, investors can be added to the Communications Equipment email
 alert system, which alerts investors to new research in the Communications
 Equipment sector.  To be added to this alert system visit
 http://pluto.sparklist.com/scripts/lyris.pl?join=epochcommeq .
     Full research coverage on other companies under coverage by Epoch is
 available for free to investors through the Epoch Web site (www.epoch.com).
     Epoch Partners is a technology-enabled investment bank focused on
 high-growth companies and electronically connected institutional and
 individual investors.
     The information contained herein is based on sources believed to be
 reliable but is neither all-inclusive nor guaranteed by Epoch Partners.
 Opinions, if any, reflect our judgment at this time and are subject to change.
 Epoch Partners does not undertake to advise of changes in its opinion or the
 information. Epoch Partners may perform or seek to perform investment banking
 services for the issuers of securities which are the subject of our Research.
 Most of the companies Epoch Partners follows are emerging growth companies
 whose securities typically involve a higher degree of risk and more volatility
 than the securities of more established companies. The securities discussed in
 the Epoch Partners Research may be unsuitable for investors depending on their
 specific investment objectives and financial situation and needs. No report
 included in the Epoch Partners Research is a recommendation that any
 particular investor should purchase or sell any particular security in any
 amount or at all and is not a solicitation of any offer to purchase or sell
 from or to any particular investor. For additional information that may be
 available on the securities mentioned, please contact Epoch Partners.
 
     Epoch Partners is a member of the National Association of Securities
 Dealers, CRD number 103899.
 
 SOURCE  Epoch Partners, Inc.