Tuesday, Exfo Electro-Optical Engineering Inc. (EXFO) reported a slip to loss for the third-quarter ended May 31, 2009, mainly on goodwill impairment charges and foreign exchange losses, even as revenues declined 10.2%. Following the announcement of results, Exfo shares plunged over 12% in after hours trading on the Nasdaq.
Exfo recorded a third quarter net loss of US$23.3 million or US$0.39 per share, compared to net profit of US$11.2 million or US$0.16 per share in the same period last year. Net loss for quarter included US$1.2 million in after-tax amortization of intangible assets and US$0.4 million in stock-based compensation costs.
On average, four analysts polled by Thomson Reuters expected the company to report a loss of US$0.05 per share for the quarter.
The company also recorded a non cash charge of US$21.7 million related to impairment of good will in the third-quarter of fiscal 2009, following a significant drop in the market capitalization since June 1, 2009.
Exfo also incurred a pre-tax, foreign exchange loss of US$4.7 million in the third-quarter of 2009 due to the impact of a 16.4% increase in the period-end value of the Canadian/US exchange rate.
Sales for the quarter decreased 10.2% to US$43.6 million from US$48.6 million in the comparable quarter last year. Analysts expected the company to report revenue of US$43.58 million for the quarter.
The company reported that net bookings that dropped 20.7% to US$40.2 million for a book to bill ratio of 0.92 in the third-quarter from US$50.7 million in the same period last year.
Gross margin improved to 62.3% of sales in the third quarter of fiscal 2009 from 60.9% in the third quarter of 2008.
Looking ahead to the fourth quarter, Exfo expects sales in the range of US$33 million to US$38 million and GAAP net loss in the range of US$0.10 to US$0.06 per share.
Analysts currently anticipate the company to report earnings or US$0.04 per share on revenues of US$45.48 million for the third quarter.
As part of its cost control efforts, the company reduced its workforce by approximately 5% or 65 employees. The company also applied for a Canadian federal program that would allow certain employees to work four days per week for a maximum of 52 weeks. Exfo will incur severance and other pre-tax related charges of about US$1.3 million that will be accounted for in the fourth-quarter of fiscal 2009.
EXFO closed Tuesday's regular trading at $3.14, down $0.269 or 7.92%. After hours trading the stock went down over 12.40% to $2.75.
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