Shares closed regular trading down $2.25 to $15.75. The stock has been down since a warning from competitor Inktomi 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 analyst polled by First Call.
The company didn't say how much losses would increase. First Call's consensus currently has CacheFlow reporting a third-quarter loss of 6 cents a 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. Earnings results for the third quarter and further details on the company's expectations for fiscal year 2001 will be reported next Tuesday.