The company reports a widening first-quarter loss, weighed down by sluggish sales of its remote network access products.
Shiva's net loss reached $8.4 million, or 29 cents a share, for the quarter ending March 29, compared with profits of $4.3 million, or 14 cents a share, a year ago.
The report comes as no surprise. Shiva warned analysts two weeks ago that it would not meet their expectations, the second-straight quarter Shiva has issued such a warning. Nonetheless, analysts still estimated of a loss of 2 cents a share, according to First Call.
Shiva attributed its lackluster performance to sluggish sales of its LanRover products, as competitors engaged in price war competition. The company ended up taking price-protection reserves of $6.7 million to cover products in the current quarter.
The company took write-downs of $6.5 million relating to its V.34 modem cards and other products. The write-downs affected earnings by 28 cents a share.
Revenues from sales of its remote access products came to $27.7 million, a drop of 22 percent from the year-ago quarter's $35.4 million intake.
The numbers reflect a year-long precipitous slide. The company was sitting pretty in early 1996, with stock in the high 80s. Shiva's shares closed today at 9-9/16.
"One main factor for the slide is the competitive landscape heating up," said Aydin Tuncer, an Internet and telco equipment analyst with the S&P Equity Group. "LanRover is a good product, but they're meeting head-to-head with U.S. Robotics and others with larger budgets."
Buyout rumors have circulated for months around the company, which finds itself struggling to compete with larger firms offering all-in-one remote-access solutions. 3Com's purchase of U.S. Robotics and Compaq's acquisition of Microcom spell even more trouble for smaller players such as Shiva, according to Tuncer.
The Bedford, Massachusetts-based company announced at the end of last month that today's announcement would show a "substantial operating loss" and cited declining sales of LanRover, declining large-customer deployment of its products, and competition in the new 56-kbps modem market. CFO Cynthia M. Deysher resigned on the same day.
The company is also defending itself against a class-action lawsuit in California. The suit alleges the company didn't disclose conditions that caused net earnings to nosedive in the fourth quarter of 1996.