Efficient revenue climbs; stock tumbles

Wednesday, July 19th 2000, 12:00 am
By: News On 6

Dallas-based Efficient Networks Inc. said Tuesday that it performed better during its fourth fiscal quarter than Wall Street expected, but its stock fell sharply because of investors' concerns about how the sector is valued.

Efficient, the leading manufacturer of modems for high-speed Internet access over telephone lines, lost $49.6 million, or 91 cents a share, in the quarter ended June 30, compared with a net loss of $12.3 million, or $3.01, a year ago. (The per-share figures aren't directly comparable, because the company had many more shares outstanding in the more recent quarter.)

Efficient cited costs of acquiring FlowPoint Corp. and Network TeleSystems Inc. Analysts said Efficient had strong growth in revenue, which surged to $101.9 million from $7.69 million, and operating results, which were negative $1.8 million, or 3 cents a share. Analysts were expecting an operating loss of 15 cents a share. Gross margins rose to 27 percent from 21 percent.

"It was a completely blow-out quarter," said Syed Haider, an analyst with Frost Securities in Dallas.

Still, Efficient's stock price fell $13 to $89 on the Nasdaq stock market. Stocks of other companies in Efficient's sector also fell. Copper Mountain Networks Inc. of Palo Alto, Calif., which sells equipment used in high-speed Internet service over phone lines, saw its stock price drop 24 percent to $94.19 after its revenue didn't meet expectations.

A competitor, Paradyne Networks Inc. of Largo, Fla., fell $4.19 to $31.75. All three stocks "were rising in expectation of earnings," Mr. Haider said. "Stocks that are hot in a hot space usually trade up on the rumors and sell off on the news." Efficient said it will report an operating profit in its first quarter and said sales will rise 20 percent to 25 percent from the fourth quarter.