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- TranSwitch now expects revenues to be in the range of $10.3 million to $10.5 million for the third quarter ended September 30. The company's previous outlook for third quarter revenues, as announced on its July 29, conference call, was to be around $10.2 million.
- The company is also revising its expectations for potential expense savings, assuming the completion of the merger, from at least $10.5 million annually to around $14 million, compared to the two companies' current expenses. In addition to $10.5 million of previously identified expense savings at Centillium, TranSwitch has identified an additional $3.5 million of potential annual savings for 2009 through restructuring of its current operations along with other expense reduction steps already initiated.
- Pending approval of Centillium's Shareholders, TranSwitch anticipates closing this transaction on or about October 24.
As a result of the restructuring, TranSwitch expects to record a one-time restructuring charge of approximately $400,000 in the fourth quarter of 2008, in addition to other anticipated one-time restructuring charges related to the merger.
The new TranSwitch, resulting from the combination of the two companies, will have a broad portfolio of communications products for next-generation broadband access, transport, carrier Ethernet and VoIP applications with important design wins in the next-generation projects of major carriers in the UK, Japan, China, Korea and India.
"We are well-positioned with strong footprints in the UK's upgrade to an all-IP network, Japan's Fiber-to-the-Home initiative, and China's 3G network deployment, along with other initiatives," said Dr. Santanu Das, CEO of TranSwitch. "These projects are just beginning to ramp and we expect them to contribute a growing stream of high-margin revenue for many years to come.
"TranSwitch has invested heavily over the past years in anticipation of the architectural change that is occurring now as carriers transition from legacy to Ethernet and IP technologies. While we will continue to invest systematically in the communications space, it will be measured and consistent with the long cycle nature of the business
"Going forward, TranSwitch has a unique opportunity to become a leader in the large and rapidly growing field of digital video transport, which complements the company's traditional communications business. The company has just begun to license its HDMI and DisplayPort intellectual property, which offers industry leading performance and functionality. We believe that the video transport business presents an opportunity for faster return on investment. Our plan is to increase investment in this area to take advantage of our technology leadership with the goal of developing a rapidly growing revenue stream.
"We will continuously re-evaluate our investment decisions with the objective of maximizing shareholder value."
Additional details on TranSwitch's third quarter results will be discussed during a conference call that will be scheduled in October. A formal announcement for the date of the conference call will be made by TranSwitch.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
((Distributed via M2 Communications Ltd - http://www.m2.com))
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