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CacheFlow stumbles on warning

Shares in the maker of computers that speed the distribution of information over the Internet drop moe than 12 percent after it warns that third-quarter sales will miss estimates.

Shares in CacheFlow, a maker of computers that speed the distribution of information over the Internet, dropped more than 12 percent Thursday after it warned that third-quarter sales will miss estimates. The company also sees a wider-than-expected loss.

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.