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P-Com plunges on earnings miss

P-Com Inc. (Nasdaq: PCMS) tumbled 23 percent Friday after it reported a net loss of 21 cents a share for its first quarter, blaming high materials and start-up costs for weak gross margins.

The loss was far below First Call Corp. estimates calling for a loss of 4 cents a share, based on the consensus of 10 analysts.

Shares in the provider of wireless access systems for the telecommunications market fell 2 11/16 to 8 13/16.

First Union Securities downgraded the stock from "buy" to "hold" following the report.

Net sales for 2000 first quarter increased 50 percent to $51.1 million, up from sales of $33.9 million for the same period in 1999. The increase was attributed to growth in core wireless product sales.

Loss from continuing operations before extraordinary items for the quarter was $13.8 million or 18 cents a share compared to a loss of $13.1 million or 27 cents a share for the first quarter of 1999.

Net loss was $15.9 million, or 21 cents a share, compared to a net loss of $6.7 million, or 14 cents a share for the same period in 1999. The company's first quarter results include an extraordinary gain on an exchange of notes to common stock, and expenses related to the divestitures of Technosystems S.p.A. and Cemetel S.r.L.

P-Com said demand for its Point-to-Multipoint product, which is quickly ramping into volume production, was strong. However, materials procurement costs and other start-up costs were a constraining factor during the quarter, and additionally impacted gross margins.

P-Com said the constraints are quickly being alleviated and should no longer be a major concern going forward. Margins are expected to improve in the second half as production volume increases.

The company also reported that it received a $10.7 million order for Point-to-Point and SDH radios in the United States, with deliveries expected over the next three to six months.

The company's top competitors include Alcatel (NYSE: ALA), Ericsson (Nasdaq: ERICY) and Nokia (NYSE: NOK), according to Hoover's.