Fore to disappoint Street
The latest victim of the troubled networking market announces that its final results will come in below estimates.
Fore stock dipped more than 30 percent in heavy morning trading in the aftermath of the announcement.
Analysts had expected Fore to post earnings of 14 cents per share for its fiscal 1999 second quarter, according to consensus estimates from First Call, but the company said that final results--to be announced October 15--are likely to come in between 9 cents and 10 cents per share. Fore posted earnings of 7 cents per share for the same period the previous year.
The latest malaise to hit the networking sector is due, in part, to similar preannouncements from the likes of Alcatel and Nortel Networks, formerly Northern Telecom. Lucent Technologies, long viewed as a stalwart of the sector, also was recently downgraded.
Fore specializes in networking equipment based on asynchronous transfer mode (ATM) technology, a high-speed pipe that is often used to interconnect various sites in a corporate layout or as a basis for service provider layouts.
The company said it expects revenue for the quarter to be between $141 million and $143 million, compared to sales of nearly $110 million for the same period the previous year. The company will also take a hit due to its recent acquisition of Berkeley Networks, causing a net loss for the quarter of between $1.70 and $1.90 per share.
Fore executives said one reason for the lowered expectations is that the number of orders the company received toward the end of the quarter exceeded the company's processing capacity. Fore's stock was hit earlier this week when rumors circulated on Wall Street that the company's quarter was "back-ended" in terms of sales.
"Although bookings are at record levels and well ahead of industry growth rates, we are disappointed that revenues are below analysts' expectations," Thomas Gill, Fore's president and chief executive, said in a statement. "We still remain encouraged by the growth opportunity for our high-end switching solutions in both enterprise and service provider networks."