Revenue for the second quarter is expected to miss analyst expectations by 4 to 6 percent, the company said. A revenue drop of $5.2 million to $8.1 million is expected, based on analysts' projections for revenue of $130 million to $135 million for the quarter.
PictureTel's stock fell as much as 2 points, over 16 percent, from yesterday's close of 12-1/4.
"The root of the problem is that customers are waiting to see how some standards will play out in the videocoferencing market," said Aydin Tuncer, an analyst with S&P Equity Group.
He added that users are also waiting for a switch to the next generation of Internet protocol products. "This is an industrywide problem?It is going through some growing pains."
Users want quality images and once that happens, this market will explode, Tuncer said. The rest of the year will continue to be difficult, as will the beginning of next year. But once the issue of standards gets ironed out, there will be improvement, he said.
Wall Street analysts are expecting profits of 15 cents a share, according to First Call. The company will report final results on July 15.
In the first quarter, overall unit shipments were strong, but revenues fell as the average selling price of various videoconferencing systems were cut and customers shifted to the newer, lower-priced products, the company said.
PictureTel has 55 percent of the videoconferencing market, but needs to focus on higher-end systems which produce higher margins, analysts said. This is a continuation of problems that the company experienced in the first quarter for the low-end market.