DragonWave, Inc. (USA) (NASDAQ:DRWI), a leading global supplier of packet microwave radio systems for mobile and access networks, today announced an update to the market on a number of items that are all converging at the same time.
We have entered an agreement with Nokia to address the impact of reduced demand being experienced through this channel in the first half of FY16 including temporary cash flow measures as well as a new commercial arrangement for Support and Maintenance services.
“We are pleased that we could come to these updated arrangements with Nokia. Nokia continues to be an important part of our business and we appreciate the support” said Peter Allen, DragonWave President and CEO.
Further expense reduction actions
We also confirmed that we are implementing further cost saving measures to reduce expenses and associated cash consumption.
The cost savings measures being implemented are planned to save approximately US$8 million in annual operating expenses as a result of staff reductions and other measures. We expect operating expenses going forward starting in our third quarter to be approximately US$8.5 million per quarter. The full impact on the financial statements will be discussed on our next earnings call. Peter Allen, DragonWave’sPresident and CEO, said “These measures will reduce our break-even point and conserve cash going forward.”
Status of major carrier activity – production and deployment
In our last conference call we talked about receiving our first order from a North America Tier 1 operator for small cell backhaul. We are now seeing the funnel with this operator strengthening.
We have been deploying equipment into our first major customer in India since May 2014.This customer has continued to place follow on orders and the rollouts are proceeding vigorously.
In May this year we announced that we had received orders to supply a second Tier 1 operator in India. During the deployment phase we have experienced an unexpected problem with our product. The problem has been isolated and corrective actions are being implemented. The deployment is time sensitive and has been halted. We are developing a plan to manage the cash flow impact and also working with the customer on the path forward.
Having successfully completed a lab trial with Harmony Enhanced we are now moving to a field trial with a European based global carrier.
Q2 FY16 revenue expectations
We are updating our revenue expectations for the second quarter of fiscal year 2016. On our Q1 earnings call we indicated we anticipated revenue growth of between 30% and 60% in Q2 relative to Q1. We believe we will be within this guidance but at the lower end of the range given lower revenue than expected from India.
NASDAQ listing requirements
We have applied to NASDAQ to move our stock exchange listing from the NASDAQ Global Select Market to the NASDAQ Capital Market, to be effective no later than August 31, 2015. This will position the company to obtain approval from NASDAQ to grant an additional 180 day period to cure the current deficiency in the stock’s bid price. We believe we qualify for this additional cure period. We expect formal approval from the NASDAQ once the first cure period ends on August 31, 2015. The approval from NASDAQ carries a condition that the company will implement a reverse split if needed to bring the trading price of the stock into compliance with NASDAQ rules by the end of the second cure period. (Original Source)
Shares of Dragonwave closed yesterday at $0.285. DRWI has a 1-year high of $1.55 and a 1-year low of $0.19. The stock’s 50-day moving average is $0.44 and its 200-day moving average is $0.65.
DragonWave Inc is a provider of high-capacity packet microwave solutions that drive next-generation IP networks. Its products are wireless network backhaul equipment.