US Report: Modem maker Hayes announces loss, restructuring

Veteran modem manufacturer Hayes last week reported the results of its second quarter as well as wide-ranging plans to restructure its operations.

The company reported a net loss of $14.2m (£8.65m), or 75 cents per share, on sales of $33m (£20.12m) for the quarter ended July 4. That compares with a net loss of $2.5m (£1.52m), or 32 cents per share, on sales of $55.7m (£34m) for the same period a year ago.

Hayes officials cited a decline in the market for analogue modems in the quarter, primarily among consumers who delayed upgrading to 56Kbps V.90 modems because their Internet service providers didn't immediately deploy the technology. Because of the decline, Hayes reduced production in its American Norcross facility, incurring $9.6m (£5.85m) in additional manufacturing costs.

As part of its restructuring, Hayes intends to put the Norcross facility up for sale. The company said it hopes a third-party contract manufacturer will purchase the plant during the third quarter, allowing Hayes to reduce expenses and focus on other areas of its business, such as cable modems or ADSL (asymmetric digital subscriber line), the officials said. "Based on the operating results in the second quarter and the commodity nature of the analogue modem market, [Hayes'] board of directors approved a comprehensive downsizing and restructuring plan that focuses our resources on the expansion of the company's technology and market position within the broadband, RAS [remote access server] and voice-over-IP markets," said Ron Howard, vice chairman and CEO of Hayes, in a prepared statement. "[The] analogue modem portion of our business will continue to be fully supported but will not be managed as a growth business," Howard added.

For Hayes, this was the second quarter of operations since the merger of Hayes Microcomputer Products and Access Beyond.