PowerDsine Ltd. reported sales of $7.4 million for the first quarter ended March 31, 2006, compared to sales of $10.1 million for the first quarter of 2005 and $7.2 million for the fourth quarter of 2005. The company reported a net loss for the first quarter of 2006 of $(4.3) million, or $(0.22) per share, compared to a net profit of $0.8 million, or $0.04 per diluted share, for the first quarter of 2005 and a net loss of $(1.7) million, or $(0.09) per share, for the fourth quarter of 2005. Net loss for the quarter includes a one-time charge of approximately $1.5 million, or ($0.08) per share, related to the recent reorganization of PowerDsine's PoE midspan business unit.
Non-GAAP net loss, excluding the aforementioned one-time charge, as well as non-cash stock-based compensation expenses totaling $813,000, was $(2.0) million, or $(0.09) per share, compared to non-GAAP net income for the first quarter of 2005 of $1.3 million or $0.06 per share, and non-GAAP net loss for the fourth quarter of 2005 of $(1.2) million, or $(0.05) per share. Stock-based compensation expense for both the first and fourth quarters of 2005 was $0.5 million.
During the first quarter of 2006, PowerDsine restructured its PoE midspan business unit. While PowerDsine will continue to sell and support its family of midspan products, the Company has undertaken various cost-cutting measures that it expects will lead to a savings of approximately $4.5 million per year.
As of March 31, 2006, cash, cash equivalents, short term and long-term investments totaled $74 million. Based on the resulting cost savings, the Company is projecting second quarter sequential revenue growth of 10%-12% and a Non-GAAP net loss per share between $(0.01) and $(0.02).
Commenting on the results, Igal Rotem, Chief Executive Officer of PowerDsine, said, "Our results for the first quarter were in line with expectations and reflect the continued shift from PoE midspans to integrated products. This shift is changing the dynamic of our business and we believe that, through our recent cost-cutting initiatives, PowerDsine is successfully adapting to the changing market."
Mr. Rotem continued, "We expect midspans to continue to play an important role in our business and we remain committed to our OEM and channel customers. However, our streamlined corporate infrastructure will enable us to devote greater resources to the development of next generation chipsets and embedded PoE technology, while leveraging our expertise in power management and silicon technologies.
"With our recent organizational changes, we are now better positioned to capitalize on the growing opportunity in the embedded space, while we expect our reduced expenses to accelerate PowerDsine's return to profitability. Moreover, we remain well positioned to capture the growth of the embedded PoE solutions market and believe that we now have the resources available to explore additional growth engines for the Company," said Mr. Rotem.
