International, Telco Markets Dampen Proxim Earnings

The company reported Tuesday a pro forma net loss for the quarter of $3.4 million, or 3 cents per share, compared with a pro forma net loss of $4 million, or 7 cents per share, for the same quarter last year. Those numbers exclude various accounting charges and costs associated with two acquisitions Proxim executed this year.

Pro forma revenue for the quarter was $46.3 million, compared with $21.7 million for the third quarter of 2001 and $45.2 million for the second quarter of 2002.

"This quarter was very difficult and disappointing for us," said Jonathan Zakin, chairman and CEO of Proxim. "We saw weakness in all areas, especially in international and telco."

Zakin said several key international wireless WAN deals have been pushed back because of the slow economy.

Proxim President and COO David King said domestically, shortfalls were seen across the company's entire product line. "When we look at the total business we are not pleased with the results of operations this quarter," he said.

Contributing to the loss this quarter was a $5 million margin account that Proxim secured for King. Following the recent decline in the price of Proxim shares guaranteeing King's loan, an investment bank demanded that he personally cover the debt. Although he was able to make some payments to the bank, King was unable to promptly pay the remaining $5 million of debt in his margin account, Zakin said.

Zakin said King will eventually reimburse Proxim for any payments made to the investment bank under the guarantee.

Although Proxim clearly had a tough quarter, Zakin pointed out that the company released several promising products this quarter, including a low-cost point-to-point bridge, a dual 802.11 A/B router upgrade and a combination 802.11 A/B wireless card.

This year Zakin orchestrated a merger between Proxim, a leader in 802.11a wireless products, and wireless WAN vendor Western Multiplex. He later acquired the Orinoco 802.11b product line from Agere Systems to round out the company's wireless networking lineup.

On an analyst conference call Tuesday, Zakin said he believes wireless will play a crucial role in networking infrastructure moving forward, and Proxim must operate efficiently until the market turns around.