After market close Tuesday, the maker of chips for network printing and connecting devices to Ethernet networks reported a fourth-quarter net loss of $2 million, or 14 cents per share, excluding one-time charges. Analyst consensus predicted a loss of 10 cents per share for NetSilicon's quarter ended Jan. 31, according to earnings tracking firm First Call.
During a conference call with analysts, company executives noted the spending slowdown reported by many technology firms. As a result, NetSilicon now expects a first-quarter loss of $2 million to $2.2 million, and a return to profitability in the third quarter. The company previously expected to lose $1 million to $1.3 million in the first quarter, and profits in the second quarter.
"In simple terms, we are pushing our results out by one quarter, due to the current economic factors," CFO Daniel Sullivan told analysts.
The economic slowdown is affecting both of NetSilicon's primary businesses.
NetSilicon's network printing revenue in the first and second quarters will essentially be the same as the fourth quarter, executives said.
The company's "intelligent device" business, which provides embedded Ethernet chips for connecting hardware to networks, will fall slightly in the first quarter into the range of $1.7 million to $1.9 million, because NetSilicon's three largest customers delayed orders, the company said.
"We believe strongly in our strategy and will continue to grow our intelligent device business," Sullivan said.
Revenue from intelligent devices will increase into the range of $2.2 million to $2.4 million in the second quarter, Sullivan said.
NetSilicon's overall fourth-quarter revenue fell 7 percent year over year to $7.8 million, and missed First Call's consensus sales forecast by $600,000.
Long-term prospects for NetSilicon remain solid, said William Becklean, analyst with Sun Trust Equitable Securities.
"I think they're doing a pretty good job of managing in a tough environment," Becklean said. "I definitely think the intelligent device business will happen, it's just a matter of time."