The Company noted that Cable Telephony & Internet Access sales during the quarter of $103.0 million, or approximately 48% of sales, were especially strong due to the deferral of sales originally scheduled for the fourth quarter of 2000 into the first quarter of 2001. Earnings per diluted share produced a loss of ($0.12) per share, a $0.04 improvement, as compared to a loss of ($0.16) per share in the fourth quarter of 2000, and compares to earnings of $0.25 per share in the first quarter of 2000. Excluding severance costs incurred, earnings would have been a loss of ($0.11) per diluted share and in line with consensus for the quarter.
Gross margin for the quarter was 15.1% reflecting a product mix strongly favoring Cable Telephony & Internet Access sales (at distributor margins) as opposed to Optical and Broadband Transmission sales. In addition, during the first quarter of 2001, lower revenues for network infrastructure products resulted in significant unabsorbed overhead in cost of goods sold. Also negatively impacting gross margins during the first quarter were severance costs related to layoffs at the factory level in response to the market’s lower demand, primarily for Optical & Broadband Transmission products.
The abrupt slowdown in spending that began in the fourth quarter of last year unfortunately has, as anticipated, continued into the first quarter of 2001, said Bob Stanzione, ANTEC President & CEO. While purchases of cable telephony equipment did resume in the quarter, spending on other infrastructure products has not yet returned to past levels. We continue to believe that underlying franchise requirements and our customer’s need for new revenue sources will ultimately cause demand for ANTEC’s broad range of HFC products to increase, continued Stanzione. Meanwhile, the downturn experienced in the last two quarters has been difficult, and we have reacted quickly to cut costs and reduce expense levels, including workforce reductions during the first quarter and the more significant reductions announced and implemented in early April. We also continue to evaluate underperforming businesses and assets and will report on actions in these areas, including any related one-time charges as decisions are made. This could be as early as the second quarter, said Stanzione.
As announced on April 10, 2001, second quarter operating expenses will be negatively impacted by a pre-tax charge of approximately $5.0 million for estimated severance and related costs in connection with the workforce reduction program that reduced overall employment levels by approximately 400. The Company estimates that this reduction will result in approximately $10.0 million in annualized savings.
Our outlook for the second quarter remains similar to the results achieved in the first quarter after adjusting for the carryover of fourth quarter cable telephony revenues into the first quarter, said Larry Margolis, ANTEC EVP & CFO. We anticipate that revenues will be in the $180 to $200 million range for the second quarter of 2001. Excluding the estimated costs of the force reductions announced on April 10, 2001 and any other charges which may be incurred in connection with our review of underperforming assets, we expect results per diluted share to be a loss of 10 to 15 cents. We are committed to lower our costs and expenses to be in line with current revenue levels and barring any further deterioration in our markets, we expect to return to profitability by the end of the year. Nevertheless, until our industry in general sees a stabilization in demand, we believe it is inappropriate to provide any longer term guidance for full year 2001 results, said Margolis.
Although the last two quarters have been very difficult for us and for our shareholders, it is still important to understand that the recently announced merger of ANTEC with Arris Interactive, LLC will dramatically change the nature of our business. We will create a new company that possesses the leading worldwide market position in cable telephony, a wide product offering for HFC system operators and a much more diverse customer base, summarized Stanzione. We are very optimistic about the future and our unique end-to-end ability to meet our customers needs with innovative and high quality ANTEC product offerings.
