Spectrian stock slides on Nortel concerns
NEW YORK, Oct 24 (Reuters) - Shares of Spectrian Corp tumbled on Friday amid widespread fears over the outlook for
Northern Telecom Ltd (NTL.TO) shipments and disappointing gross margins in its second quarter, analysts said.
The company, which makes linear power amplifiers for wireless communications equipment makers, reported above-forecast
second quarter earnings of $0.60 per share compared to a loss of $0.04 per share in the year-ago quarter.
But analysts said the company told investors on a conference call on Thursday that Nortel, its largest customer, was giving
indications of lower-than-expected shipment requirements for fiscal 1999.
The stock tumbled 15-1/8 to 27 after brokerage firms Lehman Brothers, Morgan Stanley and UBS Securities cut their ratings
on the shares.
''Lower than expected purchase commitments from Nortel's contract renewal last week limit management's visibility for the
next few quarters,'' Morgan analyst Alkesh Shah said.
Shah said the company told the conference call its revenues in the second half of 1998 will decline by about 10 percent from
the first half of the year.
It also made conservative projections of 10 percent revenue growth in fiscal 1999, he said.
Lehman Brothers analysts Todd Koffman said in a research note his downgrade was based on the cautious outlook regarding
Nortel shipments in fiscal 1999, a disappointing margin performance and larger trends suggesting wireless infrastructure growth
rates may have peaked.
Spectrian's gross margins were 28 percent in the quarter but UBS analyst Jeffrey Securities analyst Jeffrey Schlesinger said
they were down 200 basis points sequentially due to over $1 million in warranty reserves.
Schlesinger lowered his fiscal 1999 revenue projection to $195 million from $228 million.
Morgan Stanley's Shah also cited Spectrian's need to accelerate operating expenses, in order to broaden its customer base, as
another reason behind his downgrade. |
