Ascend, Western to fall short
With just one day left in the quarter, Ascend Communications and Western Digital say they will fall short of analysts' expectations.
Ascend shares fell to as low as 5-1/4 points in early trading before regaining some ground to close at 32-3/8, down 2-7/8 over yesterday. The stock was one of the more active on the Nasdaq, with 33.6 million shares trading hands, three times the normal three-month average trading volume.
Meanwhile, Western Digital lost further ground in two days of trading. Today it fell to a close of 40, down one point from yesterday. That dip builds on the drop Western encountered yesterday of 7-1/2 points over Friday's close.
Ascend said yesterday that its third-quarter earnings would fall about 33 percent below analyst expectations for the quarter ending September 30. The company said profits would be between 18 cents to 20 cents per share, while analysts had the company pegged at 31 cents a share, according to First Call. Ascend posted a profit of 29 cents per share in the same year-ago period.
And the company said its revenue also will fall short of expectations--hovering at a range of $260 to $270 million. Last year the company posted quarterly revenues of $249 million.
Ascend said delays in rolling out its MAX TNT product to international customers, as well as softness in demand for access ports in some regions outside North America, played a part in its revised outlook. The provider of networking equipment said a decrease in demand for PCs in Japan resulted in a slowdown in demand for ports. Slowing subscriber growth in Southern Europe also was cited as a contributing factor.
Ascend's stock already took a beating earlier this month, dropping about 10 points amid concerns that the networking company's earnings will be hurt by falling prices, weak European sales, and competitive new products. At least four analysts downgraded the stock or lowered expectations for the quarter. In August, Ascend disclosed in a financial document that sales in July were far less than it had expected.
Western Digital also will miss the mark for its first quarter, by about 20 percent, with profits in the range of 63 cents to 66 cents a share. Analysts had expected profits of 81 cents a share, according to FirstCall.
The company said competitive pricing pressures offset the gains from record unit-shipments of 6.3 million hard drives. In the year-ago period, Western Digital earned 35 cents per share on revenue of $883 million and unit shipments of 4.9 million.
Western Digital said hard-drive pricing cut into results as a major competitor liquidated excess inventory in the distribution channel. The maker of disk drives said its attempts to change the product mix in the latter part of September to offset the effects did not fully emerge.
The company said it will adjust its production plan for the December quarter to help reduce the industry's excess inventories.
Ascend and Western Digital expect to release final results on October 9.