In what hopefully will not be a preview of too many things to come, we have our first pre-announcement for the Q1 earnings season, and it’s not a happy one. After customer orders didn’t come through, Sonus has slashed its guidance and initiated a review of its cost structure.
Sonus has reduced its revenue forecast from $75M all the way down to $47-50M, and its earnings per share from a gain of a few pennies to a loss of 0.29-0.34. That’s a big difference, even for telecom vendors — who are especially sensitive to unexpected shifts in carrier capex spending. For the full year, Sonus says it may see revenue up to 25% below its previous guidance of $326-330M, a lower bound that works out to $246M.
Analysts are seeing it as part of a larger trend of constrained carrier capex spending exacerbated by volatility. But there’s only so much one can do to cushion a blow of that size, and the stock took a big hit yesterday. Those cost reductions aimed at bringing things into line in light of the current operating environment aren’t going to be pleasant.
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