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-- Lee Iacocca

BREAKFAST WITH THE FOOL
Sycamore Beats Estimates

By Mike Trigg
August 25, 2000

Fiber-optic network equipment company Sycamore Networks (Nasdaq: SCMR) reported earnings after the close of trading Thursday that exceeded Wall Street's expectations. The company maintains a bullish outlook for the future.

Sycamore's fiscal fourth-quarter (ended July 31) revenue totaled $90.4 million, up from $11.3 million in the year-ago quarter -- an increase of nearly 700%. Net income before adjustments was $20.4 million, or $0.08 per share, exceeding Street estimates of $0.06 per share. In the same period a year ago, net income was $9.1 million, or $0.06 per share.

Sycamore shares have jumped recently as investors remain optimistic about the optical networking market. Phone companies continue to move toward fiber-optic networks to allow them the capability to meet the growing demand of consumers for Internet access and other high-tech communication services. Sycamore sells the necessary technology enabling phone companies to offer those services.

There has been concern regarding the revenue mix for Sycamore. Williams Communications (NYSE: WCG) currently accounts for 85% of revenue, but the company noted the addition of two new customers in the quarter to bring their total to nine. Additional speculation has surfaced regarding a deal with AT&T (NYSE: T), but both companies have remained hush-hush.

"Looking ahead we see the intelligent optical network," Sycamore President and CEO Dan Smith said in a prepared statement, "extending all the way from the core to the edge of the public network. We look forward to further broadening the range and reach of our product portfolio to create new optical service technology value for our customers."

Looking forward, Fools should pay special attention to Sycamore's efforts in broadening their customer and product base. The fiber-optic network segment remains strong, and Sycamore is a player in the best sense of the word.

News to Go

Razorfish Inc. (Nasdaq: RAZF) announced that President Mike Phel resigned after just three months on the job. The Internet consulting firm and website designer did not name a replacement, but added that Phel would continue working with the firm as a consultant. COO Jean-Philippe Maheu assumed responsibility for most day-to-day operations shortly after Phel's promotion. This is the second major shake-up in management this year. CFO Larry Begley left in February, citing family reasons.

Automated control maker Honeywell (NYSE: HON) announced that it's seeking a buyer for its consumer automotive products business, which includes Prestone antifreeze, Autolite sparkplugs, and Fram oil and air filters. The sale is the company's latest attempt to divest its non-core businesses and focus on automated controls and aerospace parts. Salomon Smith Barney was hired to find a buyer for the unit.

Chattem Inc. (Nasdaq: CHTT) has agreed to sell its Ban antiperspirants and deodorant line to Kao Corp.'s Andrew Jergens unit for $160 million. Kao Corp. is Japans largest personal and sanitary products company. The company indicated that the divestiture could cut fourth-quarter earnings by $2.6 million, or $0.27 per share. The net proceeds will go toward retiring senior debt and further brand acquisitions. Let's hope for Kao Corp. that the integration of the new business is dry and smooth with no dragging or clumping, just like Ban Solid Stick.

Selectica Inc.(Nasdaq: SLTC) announced it would not go ahead with a secondary offering of 4 million shares citing current disappointment with the stock price. The San Jose, Ca.-based company, which provides software that enables customers to make complex transactions over the Web, went public back on March 10.

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