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Sandvine sales to be hit by project delays; shares fall
Analysis & Opinion
The cable news audience has peaked
By Ankur Banerjee
Thu Jun 7, 2012 11:38am EDT
(Reuters) - Network equipment maker Sandvine Corp estimated smaller-than-expected revenue for the second quarter due to delays in closing several projects with Spanish telecom company Telefonica SA.
Sandvine lost a fifth of its market value as shares hit a near five-month low of C$1.13 on Thursday on the Toronto Stock Exchange. The stock later rose to C$1.22.
The company, which received 17 percent of its fiscal 2011 revenue from Telefonica, said revenue for the current year could also fall short of its expectations.
Sandvine cited "risks associated with its ability to convert opportunities into orders and timing of revenue recognition" for the full-year sales warning.
The company started renegotiating its contract with Telefonica last year, but the process is an "incredibly long and winding road," a Sandvine executive said on a conference call.
"Second-quarter revenues were below our expectations as certain large purchase decisions continue to be pushed out," CEO Dave Caputo said in a statement earlier in the day.
The company, whose customers include U.S. cable TV provider Comcast Corp and Japan's NTT Communications, provides equipment and software that help internet service providers manage network congestion and lower undesirable traffic.
"Some customers have told me that Sandvine's products are too complicated," said CIBC World Market analyst Todd Coupland. "That complexity has caused confusion and dragged down sales."
The analyst declined to name the customers.
For the second quarter ended May 31, Sandvine estimated revenue of $18.0 million to $18.5 million. Analysts had forecast $22.1 million, according to Thomson Reuters I/B/E/S.
Waterloo, Ontario-based Sandvine, which adopted a shareholder rights plan with a 20 percent trigger in March, posted revenue of $24 million a year earlier.
(Reporting by Ankur Banerjee in Bangalore; Editing by Don Sebastian)
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