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Virata plunges on lowered guidance

Telecom equipment maker Virata Corp.'s (Nasdaq: VRTA) shares dropped 36 percent Thursday after the company said it would miss estimates for its third and fourth quarters due to the rescheduling of semiconductor shipments to its customers.

Shares of the company, which last month inked a server and software deal with Cisco (Nasdaq: CSCO), fell 5.08 to 8.98 in pre-session trading on the Island ECN network.

In a release, the company said that much of the re-scheduling is part of a supplementary contract with Westell Technologies Inc.(Nasdaq: WSTL), under which Virata will cancel 40 percent of Westell's previously contracted purchases and re-schedule the remaining shipments. Similar arrangements were made with a limited number of Virata's other customers in Asia and the U.S.

As a result the company now sees revenue in the third quarter at $37 million, down from its original $46.7 million forecast. For its fourth quarter, Virata expects revenues will be at least $37 million, down from previous estimates of $58.4 million.

Earnings for the company's third quarter were cut as well, with profits now expected to be 4 cents a share. First Call analysts had forecast earnings of 14 cents a share.