Powerwave Technologies, Inc. ( PWAV) Q3 2011 Guidance Call October 18, 2011 5:30 PM ET Executives Tom Spaeth – Treasurer Kevin Michaels – CFO and Secretary Ronald Buschur – President and CEO Analysts Steven O’Brien – JPMorgan Ted Moreau – WJB Capital Lawrence Harris – C. L. King James Basch – Dialectic Capital Amish Handar – Chevrolet Armish Mesa – Tenna Presentation Operator
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These statements are subject to numerous risks and uncertainties that could cause Powerwave’s actual results to be materially different from those projected or implied. Some of the risks and uncertainties include our ability to accurately forecast and anticipate customer orders, our ability to obtain material components within expected lead times, realized anticipated cost savings and synergies, the negative impact on demand for our products due to the macroeconomic environment, reduced demand due to industry consolidation among our major customers, fluctuations in foreign currencies, the ability to accurately forecast cash flows and credit collections, ability to enter into new markets for our products and solutions, the impact of competitive products and pricing, economic and political conditions and the loss of one or more significant customer accounts.Please refer to our press release, Powerwave’s current Form 10-K for the fiscal year ended January 2, 2011, our Form 10-Q for the quarterly period ended July 3, 2011, and other filings which are on file with the Securities and Exchange Commission for additional information and factors which could cause our actual results to be different from those projected or implied. Now I’m going to turn the call over to Kevin Michaels, Powerwave’s Chief Financial Officer. Kevin Michaels Thank You, Tom. I’ll first make a brief statement, followed by Ron, and then we’ll take your questions. First, I want to note that we have not completed our financial review procedures for the third quarter, so all amounts discussed on this call are subject to our normal quarterly close procedures. Therefore, they may end up being different from what is currently anticipated. As stated in our press release, we estimate that our third quarter revenues will be in the range $75 million to $79 million. For the third quarter, our revenues have been impacted by several factors, which include a significant slowdown by our North American Network Operator customers, a significant reduction in activity with our regional equipment manufacturing customers, coupled with further weakness in several international markets, including Western and Eastern Europe and the Middle East.
From a global perspective, we believe that the current economic environment has caused operators to reduce or postpone their spending plans for the near term, while they evaluate the macroeconomic pressures in each individual market.From a customer perspective, we estimate that both our OEM and Network Operator businesses will be down approximately 55% from the second quarter of this year. From a network operator perspective, we encountered a significant slowdown in North American marketplace, led by reduction in revenue with AT&T and the North American resellers that sell into AT&T. In addition, we have experienced reduced revenues in both the European and Middle East markets. All of these factors combined together have had a significant negative impact on our third quarter revenues. In addition, I want to note that we have entered into a sale on leaseback transaction on our headquarters facility located here in Southern California. The sales price is approximately $49.5 million and the company has simultaneously entered into a 15-year lease agreement with the purchaser. This transaction is expected to close within the next week, and the company will receive the sales proceeds upon closing of the transaction. Read the rest of this transcript for free on seekingalpha.com