Resonate warns of 4Q shortfall

Internet software developer Resonate warned after the bell Wednesday that its fourth-quarter sales will fall short of analysts’ estimates.

Resonate (Nasdaq: RSNT) shares closed up $1.69, or 18 percent, to $11.25 ahead of the warning.

Company officials said slowing information technology spending and delayed orders by both existing and prospective customers will result in fourth-quarter sales of between $5.1 million to $5.4 million.

Resonate now expects to post a loss of between 25 cents to 28 cents a share in the quarter, not terribly far off the First Call Corp. consensus estimate calling for a loss of 26 cents a share.

However, analysts were expecting sales of around $7 million in the quarter.

“We believe that over the long term Resonate's iSM solution remains business critical to enterprises and service providers looking to manage their IP based infrastructures,” said CEO Ken Schroeder in a prepared release.

Last quarter, Resonate easily topped analysts’ estimates when it posted a loss of $6.1 million, or 26 cents a share, on sales of $6.1 million, its first quarter as a public company.

After moving as high as $50.56 in November, the stock plummeted to a low of $9.13 in December.

In late November, W.R. Hambrecht analyst Prakesh Patel tried to stem the bleeding by reiterating his "buy" recommendation on the stock and a 12-month price target of $60 a share.

“In contrast to its stock price performance, we are confident that Resonate is making significant positive operational and financial progress," Patel wrote in a Nov. 29 research report. “Management is upbeat, customer satisfaction is high, and Resonate's technology is gaining recognition as the market leader.”

On Tuesday, Dain Rauscher Wessels analyst Thomas Coler downgraded Resonate from a “strong buy-aggressive” rating to a “buy-aggressive” recommendation.

All five analysts following the stock rate it either a “buy” or “strong buy.”