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| Thursday, July 06, 2006 |
- Wireless software maker Openwave Systems Inc. (Nasdaq:OPWV) on Thursday gave a fourth-quarter loss forecast and a full-year profit estimate that were well below Wall Street estimates, sending its shares down 34 percent.
The maker of software for accessing the Internet over mobile phones blamed the weak forecasts on disappointing sales in Europe and Japan, and also said its customers were taking longer to sign orders because consolidation has created larger phone carriers with more cumbersome decision-making procedures.
Openwave said it expected a net loss of 13 cents to 14 cents a share on revenue of $90 million to $92 million for the quarter ending June 30. It said it expected to break even before including exceptional items.
Analysts on average were expecting earnings of 22 cents a share before exceptional items, on revenue of about $122 million, according to Reuters Estimates.
"It's a huge disappointment," said Peter Jacobson, an analyst with Kaufman Bros.
Openwave's biggest problem was disappointing sales of its main product line, so-called WAP browser software for mobile phones, said Jefferies & Co. analyst Katherine Egbert.
She estimated that sales of the software -- installed on cell phones as well as server computers -- fell to $70 million during the fourth-quarter from $74 million a year earlier.
"The core business isn't growing," she said.
Brokerage Robert W. Baird & Co. cut its recommendation on Openwave shares to "neutral" from "outperform" on the news. Wachovia cut its rating to "market perform" from "outperform."
Openwave Chief Executive David Peterschmidt said he was reviewing the company's performance to make sure its operating cost structure was in line with revenue potential. He said he did not expect to take any quick "knee-jerk" steps to cut costs.
"We take this shortfall in performance seriously," Peterschmidt said in an analyst conference call. "Our response to the quarter's results will be thoughtful and measured."
Openwave had said on Wednesday that it received subpoenas from U.S. prosecutors seeking documents related to its stock options practices. The company is one of more than 50 under government scrutiny in a widening investigation into the way they accounted for options grants.
Openwave shares fell $3.94 to $7.53 in mid-afternoon trading on Nasdaq. Some 38 million shares changed hands, more than 14 times the three-month daily average. Before Thursday's drop, the stock had already lost more than 30 percent over the past year.
Redwood City, California-based Openwave also gave its outlook for fiscal 2007 in the conference call, forecasting pro forma earnings of 58 cents to 62 cents a share on revenue of $430 million to $460 million.
Analysts on average were expecting 2007 earnings of $1.03 a share before special items on revenue of $562 million, according to estimates. |
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