This week two alternative vendors for the telecom and internet infrastructure market pre-announced, lowering Q4 estimates materially. In the wake of Cisco’s weak off-schedule quarter, one wonders if Q4 is indeed looking like a tougher one than usual.
On Monday, Cyan announced preliminary revenue for Q4 2013 of $20-21M, well below the previous guidance of $30-33M. They saw an unexpected drop in sales to their largest customer (Windstream) that made a very big dent in their numbers. Fluctuations in revenue from a highly concentrated customer base are part of the game for smaller vendors, but of course the market took the opportunity to send their stock price down over 30% this week.
After the close on Wednesday, it was Calix’s turn to reveal slower than expected Q4 sales. They now expect revenue to fall in the $93.5-94.5M range with non-GAAP earnings per share of $0.02-0.04, down from $97-103M and $0.03-0.08. The reason: “a greater than anticipated decline in traditional year-end “budget flush” customer spending patterns than the company historically has experienced.” The news took their stock down 10% yesterday.
The financial weather in the vendor space can shift very quickly. Put these two together with Cisco’s revenue worries in the late fall, and perhaps a pattern is indeed emerging with telecoms starting to delay some capex, although Ciena’s December report is a counter example. Perhaps it’s a blip, or perhaps it’s vendor-specific. When Q4 numbers start coming out over the next few weeks, we will get a few more data points.
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Categories: Financials · Telecom Equipment
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BTI also just had to raise another $27M to keep going, looks like many of the smaller vendors that really have one product are getting hit hardest.
Cisco has been hit hard in China by the Snowden revelations, being down 17% quarter over quarter on their China sales. U
One wonders what impact the New York Times article may have on Level 3, and whether this will be discussed on the conference call – I certainly hope someone will ask a question about this potential exposure, and NOT be fobbed off by any non-committal response.