CacheFlow shares drop despite beating loss forecast
SAN FRANCISCO, Calif., Nov 21 (Reuters) - Quarterly results that beat consensus forecasts failed to save computer network company CacheFlow Inc. <CFLO.O>, whose shares plummeted on Tuesday after it said the pace of sales growth had slowed.
CacheFlow's net sales soared to $32.55 million in the fiscal 2001 second quarter ended October 31 from $22.45 million in the first quarter, but the 45 percent rise fell short of previous quarterly increases of 60 percent or more, analysts said.
The pro forma loss per share, which is calculated before extraordinary charges, was $0.09, less than the $0.11 loss expected in a poll of analysts by First Call/Thomson Financial research company.
But shares of CacheFlow, which makes equipment that improves flows of video and other rich content over the Internet, sank $14-13/16 to close at $76-13/16 before the quarterly results were released. It then dropped to $62 in after-hours trading on the Instinet system.
Analyst Adam Holiber at Wedbush Morgan Securities said CacheFlow was the victim of a market that ignored company guidance and expected unrealistic revenue growth.
A host of established and young companies have been punished this earnings season for failing to match earlier growth rates.
"They can't hit 60 percent forever or they'll be bigger than Microsoft before too long," said Holiber, who will maintain his buy recommendation. "But there are published numbers and there is what people are expecting. That is the reality of the market."
He said the company had reaffirmed guidance of sequential revenue growth of 30-40 percent for the last two quarters of the 2001 fiscal year and had forecast 20-30 percent growth per quarter in fiscal 2002.
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