4 Jan 2008 07:00
Redline Updates Second Half of Fiscal 2007 Revenue Guidance
/NOT FOR DISTRIBUTION IN THE UNITED STATES/ All figures in U.S. Dollars unless specified
TORONTO, Jan. 4 /CNW/ - Redline Communications Group Inc. ("Redline" or "the Company"), a leading provider of standards-based WiMAX and broadband wireless infrastructure products, today updated its revenue guidance for the second half of fiscal 2007.
For its fiscal 2007 fourth quarter, Redline now expects revenue of approximately $13 million, which would result in revenue of just below $27 million in the second half of 2007, an increase of close to 40% over the second half of fiscal 2006. Redline had previously projected second half fiscal 2007 revenue of $31 to $33 million.
Fourth-quarter revenue was partially affected by slower-than-expected rollouts of certain new product lines, which affected the Company's ability to reach the required volume production to fulfill customer orders during the quarter. These issues have since been resolved, and the Company expects to complete the orders over 2008. In addition, revenue was affected by orders that were received but not shipped due to customer delays in finalizing financing arrangements.
In fiscal 2008, Redline expects continued revenue growth of 50% year-over-year and to achieve profitability in the fourth quarter. Management will provide a more detailed outlook with its fiscal 2007 earnings release and conference call in mid-February.
Forward-Looking Statements
Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Redline's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Redline operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different. Redline has made various assumptions in the preparation of its financial outlook in this press release, including the following company specific assumptions: An ability to ramp sales in new WiMAX product lines and in a private label product line in its RedCONNEX business; the continued network and deployment expansion by its largest customers, especially in the Middle East and the Americas; the continued ability to have more WiMAX customers convert to commercial networks, and the ability to add new WiMAX customers, using both its 802.16-2004 and 802.16-2005 solutions; improvement in Redline's product costs due to favorable supplier pricing, offset by higher costs associated with initial customer deployments in emerging markets; increased employee costs relative to expected cost of living adjustments and employee bonuses; and the effective execution of Redline's strategy, including the execution of Redline's supply chain strategy. Redline has also made certain macroeconomic and general industry assumptions in the preparation of its financial guidance including: a modest decrease in the growth rate of the gross domestic product of global economies which is lower than the growth rate in 2007; global service provider capital expenditures in 2008 reflecting mid to high single digit growth as compared to high single digit growth in 2007; global growth rate to remain stable with investments in next generation products and services to offset declines in purchases of legacy equipment; and a moderate impact as a result of expected industry consolidation among service providers in various geographic regions, particularly in emerging markets; and the impact of the rise in the Canadian dollar in 2007 and 2008 compared to the US dollar and other world currencies. The above assumptions, although considered reasonable by Redline at the date of this press release, may prove to be inaccurate and consequently Redline's actual results could differ materially from its expectations set out in this press release.
Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following (i) risks and uncertainties relating to Redline's business including: significant competition, competitive pricing practice, cautious capital spending by customers, industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; any material, adverse affects on Redline's performance if its expectations regarding market demand for particular products prove to be wrong; any negative developments associated with Redline's suppliers and contract manufacturing agreements including our reliance on certain suppliers for key components; potential penalties, damages or cancelled customer contracts from failure to meet delivery and installation deadlines and any defects or errors in Redline's current or planned products; fluctuations in foreign currency exchange rates; potential higher operational and financial risks associated with Redline's efforts to expand internationally; a failure to protect Redline's intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the wireless industry or other aspects of the industry; any failure to successfully operate or integrate strategic acquisitions, or failure to consummate or succeed with strategic alliances; Redline's potential inability to attract or retain the personnel necessary to achieve its business objectives or to maintain an effective risk management strategy; (ii) risks and uncertainties relating to Redline's liquidity, financing arrangements and capital including: any inability of Redline to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional sources of funding; or any negative impact on Redline's ability to make future acquisitions, raise capital, issue debt and retain employees arising from stock price volatility and any declines in the market price of Redline's publicly traded securities. For additional information with respect to certain of these and other factors, see Redline's final prospectus (at page 83 under the heading "Risk Factor") which is available on Redline's website at www.redlinecommunications.com or through www.SEDAR.com. Unless otherwise required by applicable securities laws, Redline disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Redline Communications
Redline Communications (www.redlinecommunications.com) is a leading provider of standards-based wireless broadband solutions. Redline's RedMAX(TM) WiMAX Forum Certified(TM) systems and award-winning RedCONNEX(TM) family of broadband wireless infrastructure products enable service providers and other network operators to cost-effectively deliver high-bandwidth services including voice, video and data communications. Redline is committed to maintaining its wireless industry leadership with the continued development of WiMAX and other advanced wireless broadband products. With more than 75,000 installations in 80 countries, and a global network of over 140 partners, Redline's experience and expertise helps service providers, enterprises and government organizations roll out wireless broadband networks to support advanced communications.
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For further information: Redline Communications, Tom Hearne, CarolynAnderson, thearne(at)redlinecommunications.com,canderson(at)redlinecommunications.com, Tel: (905) 479-8344; Equicom Group,Craig Armitage, Vanessa Beresford, carmitage(at)equicomgroup.com,vberesford(at)equicomgroup.com, Tel: (416) 815-0700; Canaccord Adams, ChrisBowman, Tel: +44 (0)20 7050 6500(RDL)
REDLINE COMMUNICATIONS GROUP INC