TranSwitch Corp., Shelton, Conn., expects its third quarter net revenues will be between $3.3 million and $3.6 million due to continued, severe weakness in the worldwide telecommunications systems market.
Previously, TransSwitch had estimated it's third quarter revenues would be about flat with the second quarter's, when the company had revenues of $4.5 million. In the year-ago third quarter, TransSwitch also reported revenues of $4.5 million.
In addition, the company expects to incur one-time charges on a GAAP basis including a $6 million to $7 million charge consisting of costs to exit facilities and employee termination costs related to the restructuring plan announced on July 17, 2002; charges in the range of $60 million to $70 million related to the impairment of goodwill and investments in non-public companies and inventory write-downs; and a $60 million to $62 million charge to provide for a valuation allowance on deferred tax assets. The company said it will no longer recognize a future tax benefit on its statement of operations until management believes that these assets are realizable.
Also, the company will begin accounting for its investment in OptiX Networks Inc. under the equity method of accounting. This will require the company to adjust prior periods as well as record its pro-rata share of OptiX's losses on the statement of operations in this and future periods.
As a result of the actions outlined above, the Company expects to record a pro forma loss per diluted share, as adjusted in the third quarter in the range of approximately 20 to 22 cents. Previously, TranSwitch estimated its pro forma loss would be 11 to 12 cents.
The company expects to have between $217 million and $219 million of cash, cash equivalents and investments at the end of the third quarter.
Full financial results for the third quarter will be provided on October 16.