Shares in the maker of switching and routing equipment for optical networks fell $1.22 to $6.67 in early afternoon trading.
The company Thursday reported stronger-than-expected revenue for the quarter, but tempered its near-term outlook, warning that gross margins were being driven lower by pricing pressure.
Revenue was $84.1 million, above analysts' projections and an increase of 82.8 percent over last year's first quarter. The company said the growth was generated by continued commercial deployment of both transport and switching products under the company's two-year contract with Broadwing Communications and the completion of a successful field trial deployment with Williams Communications.
Pro forma net loss for the quarter was $23 million, or 7 cents a share, in line with First Call's consensus estimate.
While most analysts maintained their ratings based on those solid numbers and the company's long-term prospects, some were disappointed by the near-term outlook.
Salomon Smith Barney analyst Timothy Anderson cut his rating to "outperform" from "buy" and also slashed his full-year revenue and earnings numbers.
Pricing pressure is building, Anderson said, especially in the long-distance market "due to aggressive tactics out of" Nortel Networks and Lucent Technologies.
Anderson was also skeptical about the company's ability to garner new contracts, and the finalized deal with Qwest didn't encourage him.
U.S. Bancorp Piper Jaffray analyst Conrad Leifur maintained a "buy" rating but lowered his price target to $9 from $11.
While revenue was ahead of projections, the company's outlook is clouded by lengthening sales cycles and price pressure from competitors, Leifur wrote. He maintained his rating based on expectations that the long-term outlook for the company is favorable. In the meantime, Corvis may be "feeling the impact of the industry slowdown," Leifur wrote.
Credit Suisse First Boston analyst James Parmelee was more upbeat and reiterated his "strong buy" rating. He called the stock attractive at its current price, and noted that despite the decline in gross margins, Corvis still plans to meet its goal of profitability by the first half of 2002 by decreasing operating expenses.
Merrill Lynch analyst Michael Ching also sounded a positive note on the company's plan to undertake "strong cost reduction measures." He maintained his "neutral" rating and predicted the company will reach profitability by the third quarter of 2002.