The company, which reported its earnings after the markets closed, saw its stock drop 8 percent during trading to close at 11-5/8, down from yesterday's close of 12-5/8.
During the fourth quarter, which ended March 31, the company's net income reached $3.9 million, or 4 cents a share, compared with a loss of $9.6 million, or 11 cents a share, a year ago. But excluding a one-time $8.3 million litigation settlement, FORE would have posted earnings of $9.2 million, or 9 cents a share.
Wall Street analysts were expecting the company to report a profit of 11 cents a share, according to First Call.
Earlier this month, the company announced that sales and earnings would be below expectations. The announcement dragged the stock down 13 percent to 13 from its range of 35 when the fourth quarter began.
Revenue for the quarter totaled $101.3 million, up 35 percent from $75.3 million a year ago. But this recent fourth quarter marked the first time revenues have fallen from the previous quarter's level in more than two years. Last quarter, FORE reported revenues of $112.6 million.
"The international mix had declined with weakness in Asia, but there was pressure internationally all around. In past quarters we were able to make up Asia and Pacific shortfalls, but European business declined overall," CEO Eric Cooper, told CNET NEWS.COM previously. "Product mix remained consistent, but overall market demand fell."
Cooper also cited a strong dollar and increased competition as contributing factors in missing Wall Street's mark.
"All the networking vendors are broadening their offerings and encroaching on us. Cisco Systems (CSCO) and 3Com (COMS) compete directly with our offerings and the level of competitiveness has increased," he said.
Revenue for fiscal 1997 totaled $395.3 million, a 68-percent increase from $235.2 million reported for the 1996 fiscal year. Net income also reached $41.5 million, or 41 cents a share, for the year, up from $9.7 million, or 11 cents, in the previous year, including merger-related expenses and the non-recurring litigation settlement.
FORE today was also removed from Schroder Wertheim's recommended list of stocks. The firm said that increasing competition could limit FORE's ability to grow LAN unit sales [which generate about 40 percent of total sales] and offset the company's recent price reductions for its desktop ATM switches.
"We believe that FORE's technology lead could narrow because both Bay Networks (BAY) and Cisco Systems are about to begin volume shipments of more competitive ATM products, whereas FORE's new ATM is not planned to be introduced until the third quarter of fiscal 1998," said the report.
The firm added that a favorable earnings surprise is unlikely before the fourth quarter in fiscal 1998.