Terayon tanks on warning
Terayon Communications Systems Inc.'s shares were down more than 40 percent in early trading today, following news that the company more than halved its second-quarter outlook.
The broadband networking gear provider slashed its Q2 revenue outlook to $21 million and $30 million, down from an earlier forecast of as much as $60 million. Terayon expects to post a loss of between 38 cents and 43 cents a share. On average, analysts were expecting a loss of 26 cents a share, according to Thomson Financial/First Call.
The drastic change in the forecast was fueled by reduced customer spending and price cuts for Terayon equipment.
Terayon's new CMTS was not among the equipment to receive DOCSIS 1.1 certification yesterday. The company said it is focusing its efforts on developing equipment that is DOCSIS 2.0 based. During a conference call this morning, the company said it had already received orders from three of the five largest MSO for its DOCSIS 2.0 products. It remains unclear whether those orders will be processed to have an affect on Terayon's second quarter results.
The Nasdaq halted trading of Terayon shares in the afternoon yesterday, in anticipation of the selloff that would follow Terayon's news. As of 12:50 p.m. today, the shares had dipped to a new 52-week low of 92 cents.