CacheFlow stumbles on warning

CacheFlow Inc. (Nasdaq: CFLO) lost 13 percent Thursday after it warned that its third quarter sales will miss estimates. The company also sees a wider-than-expected loss.

Shares fell $2.31 to $15.69. The stock has been down since a warning from competitor Inktomi (Nasdaq: INKT) invoked a downgrade for CacheFlow earlier in January.

The company said revenue for the third quarter is now expected to be in the range of $20 million to $21 million. That's less than half the $43.1 million predicted by First Call's consensus.

The company didn't say how much losses would widen by. First Call's consensus currently has CacheFlow reporting a third-quarter loss of 6 cents per share. That's an improvement over a loss of 24 cents per share a year earlier and a loss of 9 cents per share in the second quarter.

The company said its long-term outlook is strong, but that macro-economic uncertainty and delays in spending from its customers have dented revenue. CEO Brian NeSmith also said the market for CacheFlow's caching appliance is "increasingly competitive," causing a lengthening of its purchasing cycle.

CacheFlow said it is currently restructuring to cut headcount and reduce spending.

Actual results for the third quarter and further details on the company's expectations for fiscal year 2001 will be reported next Tuesday.