Terayon Communication Systems, a Santa Clara, Calif.-based
cable-modem manufacturer, reported sales of $9.4 million for the third quarter ended Sept.
30, compared with revenue of $662,000 for the same period last year.
Net losses at the company increased to $6.5 million, or 44
cents per share, versus $5.6 million (51 cents) a year ago.
For the nine-month period, revenue increased to $18.8
million, up from $755,000 in 1997, and losses rose to $17.9 million, an increase of 24
percent from last year.
The nine-month loss did not include a dividend payout of
$23.9 million, or $1.84 per share, which was recorded in connection with certain equity
financing.
This was Terayon's first publicly reported quarter
following its $39 million initial public offering of stock in August.
Increased cable-modem shipments and growing acceptance of
Terayon's S-CDMA (synchronous code-division multiple-access) technology spurred the
revenue increases, the company said.
During the third quarter, Terayon shipped 17,500 modems and
170 headends to new and existing customers, the company said in its earnings release. That
brought Terayon's total-to-date shipments to 34,500 modems and 327 headends, and it
expanded the company's total homes passed to 5 million.
Terayon's customers include Cablevision Systems Corp.,
Canada's Shaw Communications Inc. and TCA Cable TV Inc.
In addition, the company said it is currently conducting
trials with AT&T Corp.'s Advanced Communications Lab, running Internet-protocol
telephony over Terayon's cable modems. The tests will be expanded in the fourth
quarter.
The company is also involved in technical trials with
Tele-Communications Inc., and it expects results from those in the fourth quarter.
While the increase in sales is reflective of the boost in
shipments of product, Terayon is also highly dependent on a few customers.
Ray Fritz, Terayon's chief financial officer, said at
an analysts' conference call last Tuesday that 66 percent of the company's
revenue is tied to three customers -- Cablevision (28 percent), Shaw (24 percent) and
Japan's Sumitomo Corp. (14 percent).
The company also stated that it is in discussions with
several "very strong and very large operators in North America" concerning modem
sales. However, Terayon declined to identify those companies before any deals are made.
