ECI Telecom Ltd., a maker of telecommunications equipment, said first-quarter profit rose after it recorded a $12.5 million tax benefit from selling shares in its Veraz Networks unit.
Net income climbed to $18.7m., or 15 cents a diluted share, from $3.1m., or 3 cents, a year earlier. Excluding the tax benefit, earnings doubled, the Petah Tikva-based company said Thursday.
Earnings were boosted after San Jose, California-based Veraz priced its initial public offering on the Nasdaq Stock Market at $8 a share in April. The broadband unit's sales, which make up one-third of ECI's business, rose from the previous three months after Deutsche Telekom AG placed more orders for broadband equipment,
"There was significant growth from this customer," Chief Financial Officer Giora Bitan said about Deutsche Telekom, which placed more orders for broadband equipment. ECI, whose optical network business counts on growing mobile phone subscriber bases in emerging markets, has important customers in India, he said in a phone interview from the capital New Delhi, where the company was holding its board meeting.
Sales for the quarter fell to $155m. from $162m. ECI's revenue slowed in 2006 when orders for broadband access equipment declined as two major customers, Deutsche Telekom and France Telecom SA, delayed purchases because of technological and regulatory issues.
The company said it expects revenue and net income to rise from one quarter to the next for the rest of this year.
Net income, excluding costs and the tax benefit, climbed to $9.7m., or 8 cents a diluted share, from $7.1m., or 6 cents, last year. That was in line with the 8 cents median estimate of four analysts Bloomberg News surveyed.(Bloomberg)