NYKnick, here's the WSJ article you were referring to. Note that it came out I think before the earnings warning. Note also what I put in bold and compare that to what happened after the close today.
Bay Networks Shares Slip As 3Q Worries
Grow
By Mark Boslet and Joelle Tessler
PALO ALTO, Calif. (Dow Jones)--Worries that Bay Networks Inc.
(BAY) is struggling to make Wall Street's third-quarter estimates have
tripped up its stock in recent weeks.
Several analysts have revised ratings or estimates on the company,
including two who came out with research notes Tuesday.
At CIBC Oppenheimer, Martin Pyykkonen moved the networking
equipment maker to a hold rating from buy. SoundView Financial Group
Inc. analyst Michael Karfopoulos also lowered his earnings estimate for the
company to 25 cents a share from 30 cents.
Bay earned 10 cents a share, excluding restructuring and severance
charges, in the year-ago third quarter.
Bay declined to comment on the stock trading or its third-quarter
prospects, saying it was in a "quiet period" in advance of the quarter's
March 31 close.
But analysts and industry experts say a combination of factors are
influencing third-quarter performance, including competition from industry
leader Cisco Systems Inc. (CSCO).
Equally important, the company's new Accelar high-performance routing
switch appears to be missing some of Wall Street's ambitious growth
targets. At the end of its second quarter, Bay officials said they planned to
increase production of this next generation product, which began shipping
in December, to thousands of units in the third quarter from hundreds of
units in the second quarter.
They also warned that the third quarter overall experiences seasonal
softness.
In his research note, Pyykkonen said the company appears to be facing a
"slower near-term ramp in the new Accelar family" coupled with a
"deceleration in the company's older product lines, namely its shared media
hubs and routers."
As a result, he lowered his quarterly estimate to 21 cents from 28 cents and
said he expects the company's book-to-bill will be less than 1. The Accelar
family will see a book-to-bill ratio of about 1, he said.
A book-to-bill ratio compares orders with shipments with a reading above
1 showing that orders are coming in faster than shipments are going out.
Karfopoulos in a research note also cited Accelar as a reason for his
revision. The "low adoption rate of (the) Accelar switch as (the) sales cycle
is months not weeks" contributed to the quarter, he said.
Bay shares have slumped steadily since late February when they traded as
high as the mid 30s. Tuesday, the stock was at 26 11/16, unchanged from
Monday, on volume of 6.7 million shares compared with average daily
volume of 3.4 million.
-Mark Boslet; 650-496-1366 and Joelle Tessler; 201-938-5285 |
