C-Cor says revenues for its first fiscal quarter, which ended in September, would be $62 million, compared to its prior guess of $64 million to $67 million. Earnings should still fall in C-Cor's projected range of 2 to 5 cents, although they will be in the lower end of the range, officials report. The company didn't offer many details, saying only that "delays in software sales" led to the shortfall.
C-Cor's stock fell 74 cents (8.6%) to $7.85 today. Harmonic got off easier: down 22 cents (3%) to $6.91.
Earnings disappointments are the norm this quarter, with plenty of systems companies announcing shortfalls to come (see Earnings Warning Turns Redback Blue, Avici Target out of Reach , UTStar Cuts Estimates, Board Member Resigns, and Nortel Sees Light Revenues, Slow Growth). Analysts still see a bright near-term future for C-Cor and Harmonic, though, noting that last quarter's troubles don't point to chronic problems in the cable world. Harmonic announced sales for its September quarter would fall between $50 million and $51 million, down from analysts' consensus of $56.2 million, according to Reuters Research. Including some profits from sale of old inventory, the company expects losses for the quarter to be 3 cents to 5 cents per share; analysts had expected the figure to round to zero cents.
The announcement implies that Harmonic didn't lose the orders, but simply has them postponed into the fourth quarter. The company is sticking to previous predictions of $125 million to $130 million in revenues for the second half of 2004.
The orders came from its Convergent Systems division, where two U.S. MSO orders didn't arrive in time to count for September revenues. Kamman pointed to reduced spending on the company's Narrowcast Services Gateway "by Comcast and other domestic operators for video-on-demand systems."
The CS group also includes encoding gear for satellite-TV providers, and Kamman thinks the company has seen spending dip in that sector as well.
But Harmonic is seeing sales drop with its other division, the Broadband Access Networks (BAN) group, as well. Revenues from BAN should be $16 million for the September quarter, down from $23 million for the June quarter, officials say.
One analyst thinks Adelphia Communications Corp. (Nasdaq: ADLAC) is to blame. "It appears that Adelphia has slowed its rebuild activity due to the planned sale of the company," writes analyst April Horace of Janco Partners Inc., referring to the fact that the bankrupt cable operator is accepting bids (see Adelphia Advisors Approved).
On the plus side, Harmonic is seeing telco revenues pick up. That sector should account for 10 percent of sales in the September quarter "which is a first for HLIT," Horace writes.
Analysts didn't see much reason to panic for C-Cor, either. "We see C-Cor as well positioned for growth on (post-sale) Adelphia upgrades, international upgrades, and high-margin software business growth," noted Steve Kamman of CIBC World Markets, in a research report issued today.
— Craig Matsumoto, Senior Editor, Light Reading
For more info on the state of industry financials, check out the coming Light Reading Live! event:
- Light Reading's Telecom Investment Conference, in New York City, December 15, 2004