Proxim Reports Narrowed Losses For Third Quarter

Frank Plastina, president and CEO of Proxim, Sunnyvale, Calif., told investors on a Tuesday afternoon conference call to discuss the results, he's pleased with the company's revenue performance during the quarter.

"We are encouraged by our Q3 results," said Plastina. "I believe we are now beginning to see tangible results in our business that reflects our strong product portfolio and market opportunities."

Plastina outlined strategic business opportunities for Proxim created by new partnerships such as a recent agreement with Motorola along with increased business demand for Wi-Fi and wireless broadband products and improved regulatory wireless radio standards.

For its third quarter ended Sept. 27, 2003, Proxim reported a net loss, excluding charges, of $4.8 million, or 4 cents per share, on sales of $35.1 million. That compares with a net loss, excluding charges, of $10.7 million, or 9 cents per share, on sales of $24.1 million for the same period last year.

Wall Street analysts predicted a loss of 3 cents, according to First Call/Thomson Financial. Shares of Proxim closed trading up at $1.59 per share, but sank 9 cents to $1.50 per share in after hours trading shortly after the earnings results were announced.

Included among charges during the quarter is recorded $25.8 million for royalties ($22.9 million) and interest ($2.9 million) for WLAN patent infringements by Proxim against Symbol Technologies, as decided by a U.S. District Court jury in Delaware in mid-September.

The jury awarded Symbol 6 percent royalties on Proxim's past sales of the infringing products, which date back to 1995 and include Proxim's Open Air, 802.11 and 802.11b products.

During the call, Proxim executives again emphasized Proxim's view of the Symbol litigation as an ongoing legal matter, "including a bench trial on Proxim's equitable defenses." The amount and timing of any actual cash settlement is dependent upon the outcome of these legal proceedings, and Proxim has not yet been enjoined from the continued sales of these products, according to the company.

Plastina told investors that during the third quarter Proxim's revenue mix was 50 percent Wi-Fi, or WLAN products, and 50 percent outdoor Wireless WAN products. Sales of Proxim's Orinoco line of products grew 17 percent sequentially over the second quarter, 2003, said Plastina,.

"We see these gains particularly in the enterprise, public sector and carrier hot spot segments," said Plastina.

Broadband wireless revenue remains steady, he said. New applications for these products include enterprise campus connectivity, and last mile access.

Plastina said the company is also pleased with increased activity with carriers worldwide for metro area network applications, last mile access, cellular backhaul, leased line replacement, and hot spot deployments.

"We believe we are particularly well positioned in the hot spot market," said Plastina.

Strategic partnerships during the quarter include an expanded relationship with Motorola. Through a three-year licensing and distribution agreement, Plastina said Proxim's Wi-Fi solutions will be offered to Motorola customers through its authorized dealers during the fourth quarter of this year.

The initial value to Proxim, said Plastina, is about $10 million in revenue through 2004. Plastina said Proxim is also placing increased focus on co-marketing activities with partners such as Motorola and others, to grow the relationship and gain ground in what he considers complementary channels to market.

For instance, Plastina said Proxim is participating in extensive road show activities in conjunction with Motorola to "gain visibility and educate Motorola customers on Wi-Fi and wireless broad band solutions."

Plastina also noted opportunities that would open up following recent events including the FCC's approval to open up the 70, 80 and 90 GHz spectrum bands. These radio bands, said Plastina, are well suited for licensees to offer high speed point-to-point wireless area networks and broadband Internet access.

"With this increased spectrum becoming available worldwide," said Plastina. "Our broadband wireless solutions are in a position to graduate from adjunct parts of networks to large-scale, fully integrated components of wide area and local area networks fully able to support voice, data and video applications."

Looking ahead to the fourth quarter, Plastina said the company expects revenue to increase to about $37 million, with a per-share loss between 2 cents to 4 cents.