Terayon: 2003 Depends on DOCSIS 2.0 - Multichannel

Terayon: 2003 Depends on DOCSIS 2.0

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While it is banking much of its business future on Data Over Cable Service
Interface Specification 2.0, that didn't save Terayon Communication Systems Inc.
from a rather dismal fourth quarter.

The Santa Clara, Calif.-based supplier of cable modems and digital-TV-headend
equipment reported revenues of $25.3 million in the final months of 2002, a 68
percent drop from the $80.2 million posted in the same quarter of 2001.

For the year, Terayon's revenue dropped 54 percent, down from $279.5 million
in 2001 to $129.4 million in 2002.

Net loss for the quarter totaled $20.5 million, or 28 cents per share -- a
significant increase from the $6.2 million loss posted in the same quarter of
2001.

But the year's total net loss was a huge improvement, coming in at $44.2
million, or 61 cents per share, compared with $563.8 million in 2001.

Another bright spot for Terayon was its decrease in operating expense for the
quarter -- down to $18.9 million excluding its Imedia Semiconductor subsidiary.
That was ahead of the company's $20 million goal.

The company's outlook, meanwhile, banks on a growing demand for DOCSIS 2.0
products.

Terayon's certified DOCSIS 2.0 modems and qualified
cable-modem-termination-system units could give it a market advantage, but the
volume of 2003 CMTS deployments driving that technology is still uncertain,
according to the company.

For the first quarter of 2003, Terayon is projecting revenue of between $22
million and $30 million, with a net loss per share of between 25 cents and 34
cents.

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