Harris Stratex Networks Swings to Quarterly Loss on Writedowns

Harris Stratex Networks has swung into a quarterly loss after it wrote down its goodwill in light of the ongoing economic downturn. The firm reported revenue for the second quarter of fiscal 2009 of US$190.9 million, an increase of 5 percent compared with $181.1 million in the year ago period. The GAAP net loss was $315.4 million, compared with a net loss of $3.2 million.

In January, the firm determined that based on the current global economic environment and the decline of its market capitalization, it was likely that an indicator of goodwill and other indefinite lived intangible asset impairment existed as of the end of the second quarter of fiscal 2009. The results of a review were a $279.0 million charge to write down all of its goodwill, and a $22.0 million charge to write down a majority of the indefinite lived intangible assets. Harris also recorded an increase in deferred tax valuation allowance of $20.8 million based on our assessment of the future recoverability of our deferred tax assets.

Due to the macro-economic situation, it is more difficult to provide financial guidance and it makes it more likely that Harris Stratex Networks actual results could differ materially from current expectations.  

"As we enter our third fiscal quarter, we are pleased to see that overall demand for our backhaul solutions and services remains relatively strong.  However, the weakened global economy and the challenging credit markets are creating forecasting and timing issues in our market segment, which then inhibit our visibility.  Our current revenue expectations for Q3 are in the range of $150 million to $170 million," said Harald Braun, president and chief executive officer of Harris Stratex Networks. "We plan to align worldwide operations with current market conditions and continue to reduce our spending."

Harris Stratex Networks is 56% owned by Harris Corp. which has said that Harris Stratex could be sold or split off into a separate company. A decision is expected within the next few months. Harris Corp focuses on military and broadcast networks, while Harris Stratex supplies primarily backhaul products to the telecoms market.

Posted to the site on 5th February 2009