Second quarter earnings per share to be approximately $0.28, excluding previously announced one-time charges of up to $9 million associated with the Company’s recently completed workforce reduction, and up to $15 million for the write-down of investments.
Comverse estimates sales for the third and fourth quarters will be approximately $330 million and $340 million, respectively, yielding estimated fiscal 2001 sales of approximately $1.38 billion. The Company expects gross margins to be approximately 59% for the remainder of fiscal 2001, due in part to fixed costs spread over a lower than expected sales base. The Company estimates earnings per share for the third and fourth quarters will be approximately $0.20 and $0.23, respectively, for an estimated fiscal 2001 EPS, excluding one-time charges, of approximately $1.14. For fiscal 2002, the Company estimates 5% sequential quarterly sales growth, or approximately $1.53 billion, and earnings per share growth of 20%, to $1.37.
Although most of our products support profitable, revenue-generating services, and are considered strategic competitive weapons for communication service providers, the capital spending recession and macro-economic slowdown appears to have spread throughout the developed world, and conditions have continued to deteriorate, said Kobi Alexander, Chairman and CEO of Comverse Technology. Increasingly, customers have postponed discretionary purchases, such as the replacement of competitors’ systems, and system and software upgrades. Furthermore, the delays in next-generation 2.5/3G wireless network launches have postponed the realization of several significant opportunities. In addition, more customers are buying ‘just-in-time’ and in smaller increments. And, our Infosys division, continues to feel the impact of lower enterprise spending. Finally, our results are being impacted by the combination of a strong Dollar and a weak Euro.
At the same time, we are, for many reasons, optimistic about the long-term growth prospects for Comverse’s markets and our competitive position within those markets, said Alexander. Each of our three major operating units is now established as the market leader, and we continue to expand our market share in all three areas. We have very strong products and technology, have a customer base unparalleled in our industry, and have a solid balance sheet, which includes approximately $1.7 billion in cash, cash equivalents, and short-term investments.
