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| Monday, October 09, 2006 |
Shares of Powerwave Technologies Inc. tumbled Monday after the wireless communications equipment maker warned of a significant third-quarter sales miss, because of delayed production and shipments.
The Santa Ana, Calif.-based company's shares fell $1.30, or 16.7 percent, to $6.50 in afternoon trading on the New York Stock Exchange, nearing a 52-week low of $6.20.
Powerwave, which makes radio-frequency power amplifiers used in the base stations of cellular and other networks, lowered its revenue guidance to between $155 million and $160 million, from the prior estimate of $200 million to $210 million. The new outlook is well below Wall Street's estimates of $206.2 million, according to Thomson Financial.
The company expects to report third-quarter results Nov. 2 after the market close.
"We believe its credibility took a big hit today given the size and company-specific nature of the miss," wrote Jefferies analyst Bill Choi in a note to investors. Past quarterly misses, he said, have been due to lower-than-expected spending from one large customer, Cingular.
Choi kept a "Hold" rating on Powerwave, but said he planned to update revenue and earnings estimates soon.
The company said it experienced difficulties in starting up a new system in Europe, and saw delays in production transfers from one of its manufacturing facilities.
Choi said weakness from Europe and original equipment customers accounted for about $10 million to $20 million of the revenue shortfall.
"We remain concerned over continued slowdown in overall wireless capital spending heading into 2007," he wrote.
Baird analyst Kenneth Muth said in a note to clients he is advising a "wait-and-see" approach with the company's shares, given Powerwave's internal operating issues and the likelihood of competitive market share loss. But he added that the stock could rise in 2007, as the bar is set low and capital expenditures are "looking better."
Muth kept Powerwave at "Neutral" with a $7 price target. |
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