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Digital, Paradyne take separate paths

Two of the Tampa Bay area's best-known tech companies continued their march in opposite directions Tuesday.

Digital Lightwave Inc. posted better-than-expected earnings of $9.3-million on surging revenues for its second quarter while struggling phone equipment provider Paradyne Networks Inc. lost $18.1-million amid a continued slump in sales.

Clearwater-based Digital, which makes equipment for testing fiber-optic networks, reported net income of 28 cents per diluted share, besting analyst estimates of 25 cents a share. Revenues rose to $34.5-million, up 56 percent from $22.1-million in the year-ago period.

"The company achieved record revenues despite the slowdown," said Digital chief executive Gerry Chastelet, who continued a two-year streak of beating market expectations.

Chastelet said Digital was hardly immune to the downturn in telecom spending, particularly with demand for its portable units in North America down 25 percent from the previous quarter, by one analyst's estimate.

Nortel and Cisco, two of its biggest customers historically, have put their pocketbooks away. Cisco, a major buyer a year ago, was only a "minimal contributor" last quarter, Chastelet said.

Instead, Digital shifted to selling to other sectors, such as service providers. A boost in sales of network integrated testing products helped offset the downturn in the portable business sector.

Digital also "neutralized" the downturn with a growth in international sales and by adding 15 new customers, Chastelet said. Top customers for the quarter included Ciena, Qwest and TyCom.

"Nice job during the quarter considering the environment," said analyst Robert Tango of William Blair & Co.

Largo-based Paradyne's numbers weren't as pretty. The company's net loss of $18.1-million, or 55 cents a share, was exacerbated by a charge of $4.2-million for unamortized good will and a write-down of $10.9-million for inventory. Revenues of $28.2-million were off 63 percent from the year-ago quarter and down $4.9-million from the first quarter, but better than Paradyne's previous guidance. Earlier, Paradyne said revenues would be in the $20-million to $25-million range.

During a late Tuesday conference call with analysts, president and chief executive Sean Belanger noted several bright spots.

"Our focus has paid off," Belanger said. "We were able to keep expenses in check and grow cash in the quarter."

Belanger conceded the company has been through a rough six months: job cuts, salary reductions and a cutback in the manufacturing workweek. But he saw resiliency in the organization, noting that the 600-employee company had only eight resignations during the quarter.

Belanger declined to make predictions beyond the end of the third quarter. "I don't want to predict any bottom in any market here," he said. "But I don't think the business is going away."

Both Paradyne and Digital Lightwave released earnings after the close of markets Tuesday.

Shares in Digital closed at $31.02, up $3.46, or 12.5 percent. Paradyne's stock, hovering near a 52-week low, inched up 4 cents to close at $1.17 a share.

_ Times staff writer Kris Hundley contributed to this report. Jeff Harrington can be reached at harringtonsptimes.com or (813) 226-3407.

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