Verilink has plans to buy 2nd firm

Larscom deal comes on heels of solid 3Q gains in sales

Thursday, April 29, 2004

By BRIAN LAWSON

Times Business Writer brianl@htimes.com

Huntsville-based Verilink Corp. this morning announced it will acquire Larscom Inc. of Newark, Calif.

The announcement follows Verilink's report Wednesday that its third quarter sales nearly tripled from the same period a year ago.

Verilink, which makes high-speed telecommunications products, will buy Larscom for about $6 million in common stock, with each Larscom share being converted into 1.166 Verilink shares.

"We believe as a single company, we can better assist telecom service providers in their offering of value-added services such as high-speed Ethernet and (voice over Internet protocol)," said Leigh S. Belden, Verilink's chief executive officer.

Larscom, traded on the Nasdaq under the symbol LARS, develops products that enable high-speed, reliable data transmission, according to a company news release.

On Wednesday, Verilink reported sales of $13.6 million for its fiscal third quarter, compared to sales of $5.4 million from the 2003 third quarter.

During a conference call with analysts, Belden said the company had strong customer orders and a good response to a number of new Verilink products. He said he expects sales to be even better in the fourth quarter.

Verilink reported a net income loss of $1.4 million, 9 cents per share, for the quarter due to costs associated with its February acquisition of Colorado-based XEL Communications Inc. XEL provides telecommunications voice and data products for each of the regional Bell operating companies and has an active service business with the Bell carriers.

Verilink reported $2.1 million in charges related to the XEL acquisition, including $425,000 for costs of moving XEL manufacturing to Verilink's Madison facility and consolidating other former XEL functions.

Verilink officials said the overall XEL deal could cost about $17 million, including stock and cash considerations.

Excluding the XEL charges, Verilink reported net income of $683,000, 5 cents per share, compared to $212,000, 1 cent per share, in the same period in 2003.

XEL had $21 million in sales in 2003. Belden said Verilink will see a positive financial impact from the acquisition in fiscal 2005, which begins in July.

During a conference call Wednesday, Belden was asked about problems at Nortel Networks, Verilink's largest customer, which accounted for 51 percent of Verilink's business in 2003. Nortel fired three top executives, including its CEO and chief financial office, on Wednesday amid continued problems with the company's financial reporting.

Belden said he is in regular contact with Nortel and is not aware of any issues related to Nortel's problems that could hurt Verilink.

Verilink stock is traded on Nasdaq under the ticker symbol "VRLK." Verilink shares closed down 58 cents Wednesday at $4.42.



Verilink has plans to buy 2nd firm Larscom deal comes on heels of solid 3Q gains in sales Thursday, April 29, 2004 By BRIAN LAWSON Times Business Writer brianl@htimes.com Huntsville-based Verilink Corp. this morning announced it will acquire Larscom Inc. of Newark, Calif. The announcement follows Verilink's report Wednesday that its third quarter sales nearly tripled from the same period a year ago. Verilink, which makes high-speed telecommunications products, will buy Larscom for about $6 million in common stock, with each Larscom share being converted into 1.166 Verilink shares. "We believe as a single company, we can better assist telecom service providers in their offering of value-added services such as high-speed Ethernet and (voice over Internet protocol)," said Leigh S. Belden, Verilink's chief executive officer. Larscom, traded on the Nasdaq under the symbol LARS, develops products that enable high-speed, reliable data transmission, according to a company news release. On Wednesday, Verilink reported sales of $13.6 million for its fiscal third quarter, compared to sales of $5.4 million from the 2003 third quarter. During a conference call with analysts, Belden said the company had strong customer orders and a good response to a number of new Verilink products. He said he expects sales to be even better in the fourth quarter. Verilink reported a net income loss of $1.4 million, 9 cents per share, for the quarter due to costs associated with its February acquisition of Colorado-based XEL Communications Inc. XEL provides telecommunications voice and data products for each of the regional Bell operating companies and has an active service business with the Bell carriers. Verilink reported $2.1 million in charges related to the XEL acquisition, including $425,000 for costs of moving XEL manufacturing to Verilink's Madison facility and consolidating other former XEL functions. Verilink officials said the overall XEL deal could cost about $17 million, including stock and cash considerations. Excluding the XEL charges, Verilink reported net income of $683,000, 5 cents per share, compared to $212,000, 1 cent per share, in the same period in 2003. XEL had $21 million in sales in 2003. Belden said Verilink will see a positive financial impact from the acquisition in fiscal 2005, which begins in July. During a conference call Wednesday, Belden was asked about problems at Nortel Networks, Verilink's largest customer, which accounted for 51 percent of Verilink's business in 2003. Nortel fired three top executives, including its CEO and chief financial office, on Wednesday amid continued problems with the company's financial reporting. Belden said he is in regular contact with Nortel and is not aware of any issues related to Nortel's problems that could hurt Verilink. Verilink stock is traded on Nasdaq under the ticker symbol "VRLK." Verilink shares closed down 58 cents Wednesday at $4.42. Copyright 2004 al.com. All Rights Reserved.