MMC Networks (Nasdaq: MMCN) fell 18 percent Friday after its chief financial officer, Uday Bellary, resigned amid news the company would see significant sales declines in its fourth quarter.
Shares fell 3 7/16 to 27 7/8 after the network processor maker announced Bellary, who is leaving to pursue start-up opportunities, will leave the company Oct. 31.
After Thursday's closing bell, the company announced a sliver of good news: net income for the third quarter was $4.9 million or 14 cents a share, squeaking by First Call's estimate of 13 cents a share.
But it also sees a large wedge coming out of fourth quarter revenue. MMC had said in an Aug. 31 press release that IBM's exit from the LAN switch/router business might result in a 5 to 10 percent sequential decline in its fourth quarter.
"Based on recent discussions with IBM, we now believe that fourth quarter fiscal 1999 revenues will be lower than previously announced on Aug. 31 due to backlog cancellations and negotiations over chip work-in-progress," said Doug Spreng, president and CEO in a company release.
Spreng also said "MMC continues to build momentum that will help broaden our customer base." MMC plunged in September plunge because of its undiversified customer base?
MMC's $4.9 million net income this quarter is up from the $4.1 million or 12 cents a share for the second quarter, and net income of $3.0 million or 9 cents a share for the third quarter of 1998. Revenue for the was $23.1 million, up 65 percent from $14.0 million in revenues reported in the third quarter of 1998.