EXTR--this time from Cnnfn
<<NEW YORK CITY (CNNfn) - Shares of Extreme Networks took a tumble Tuesday, apparently knocked down by speculation that the computer-networking-equipment maker's fiscal fourth-quarter earnings will not exceed analysts' expectations.
Morgan Stanley analyst Chris Depuy on Tuesday issued a research report advising investors not to expect an upside earnings surprise - as some had expected -- from the Santa Clara, Calif.-based company, but he did not change his "outperform" rating on the stock and he maintained his 12-month price target of 105.
That sent Extreme Networks (EXTR) shares down as much as 31 percent. In afternoon trade on the Nasdaq, Extreme Networks shares were down 22-15/54 at 72-1/2, up from the day's low of 65.
However, Morgan Stanley's comments may have been misconstrued as meaning that the company could possibly miss its targets for the quarter, another analyst said.
"I think it's being interpreted differently than what he wanted," Paul Johnson, an analyst at BancBoston Roberston Stephens in New York told CNNfn.com.
"He said that he does not expect as much upside in the December quarter as we got in the September quarter, primarily because their new products aren't really shipping in volume until March," Johnson added. "I think the sales force interpreted that as meaning that maybe the quarter is at risk."
Depuy was not immediately available for comment.
Analysts polled by First Call Corp. expect the company to earn 9 cents per share in its second quarter.
One of a number of recently public networking companies that have seen their share prices soar this year, Extreme Networks - which competes with networking powerhouse Cisco Systems (CSCO) - last month reported fiscal first-quarter profits of $4.05 million, or 8 cents per share, beating the analysts' forecast of 6 cents per share.
But, Johnson called the December quarter "irrelevant" for Extreme Networks because of some of the new, high-speed, network-switching products in its pipeline - which are expected to contribute substantially to the company's top and bottom line - will not begin shipping until March.
If these new products are as good as we think they are, then all that matters is next year," Johnson said. "This quarter's a throwaway."
Tuesday's sharp decline offers investors a good opportunity to pick up Extreme Networks shares at a greatly reduced price, according to Johnson.
"We're pounding the tables," he said. "The stock is going to stay up, and now it's free money."
Extreme Networks, along with rival Foundry Networks, claims that its networking gear is easier to install and faster than that made by Cisco. Companies are racing to install the fastest and most reliable gear to speed data across their corporate networks and the Internet.>>
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