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PairGain slips on earnings, downgrade

Shares of PairGain Technologies Inc. (Nasdaq: PAIR) fell 5/8, or 5 percent, to 10 15/16 Wednesday after the company missed analysts' estimates for the second consecutive quarter.

On Tuesday, the maker of digital subscriber line products posted a profit of $3.5 million, or 5 cents a share, on sales of $61.2 million.

First Call consensus expected it to earn 6 cents a share in the quarter.

Deutsche Banc Alex. Brown cut the stock from a "buy" recommendation to "market perform."

The lackluster results were primarily a result of extreme pricing pressure throughout the industry.

Gross profit margins fell to 41.4 percent in the quarter, down from 50.8 percent in the year-ago quarter when it earned $11.8 million, or 16 cents a share, on sales of $73.4 million.

PairGain shares closed off 11/16 to 11 9/16 ahead of the earnings report.

Including a $1.5 million second quarter write-off of a long-term investment and a $1.5 million charge for the settlement of litigation between the company and Harris Corp., PairGain earned only $1.1 million, or 1 cent a share, in the quarter.

Its shares raced up to a 52-week high of 17 3/8 last July before swooning to a low of 6 in October.

Ten of the 18 analysts following the stock maintain either a "buy" or "strong buy" recommendation.