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Openwave Posts Loss, to Restructure

Communications software maker Openwave Systems Inc. Monday revealed a first-quarter loss of $170.5 million, or 99 cents a share, and announced unspecified restructuring to the tune of a $35 to $40 million charge for the December 2001 quarter.

Minus merger and acquisition-related charges, the Redwood City, Calif. firm said it lost $5.9 million or 3 cents a share, compared to a loss of $4.9 million, or 3 cents a share a year earlier. First Call analysts had expected a loss of 3 cents a share. Revenues for the first fiscal quarter reached $117.2 million.

Openwave's fiscal status is in line with preliminary estimates released Oct. 2, in which the firm said revenues were expected to be approximately $115 million to $120 million with pro forma loss of approximately 1 cent to 4 cents per diluted share for its first fiscal quarter excluding certain charges and stock based compensation.

And despite seeing its messaging business grow to 189 million licensed seats as of the end of September 2001, with activated seats reaching 124.9 million, communications applications makers such as Openwave, along with the communications service providers (think Verizon, Sprint) they partner with, are enduring their share of troubles in the soft economy.

Citing the "uncertainty of the telecommunications market," Openwave Chairman, President and Chief Executive Officer Don Listwin said the firm will realign operations to reduce operating expenses by roughly $20 million per quarter prospectively, with cost reductions to begin in the December quarter and to continue in succeeding quarters until the targeted level of reductions has been achieved.

After all of that, Openwave's current outlook for the quarter ending December 31, 2001 is such: revenues will be $100 million with a potential variability of plus or minus 15 percent, gross profit will range between 83 and 85 percent, and pro forma loss per share will range between 6 cents and 19 cents per share.