Envivio Shares Fall More Than 50% in 3 Hours

Shares in video processing specialist Envivio Inc. (NASDAQ: ENVI) fell more than 50 percent Tuesday morning after the company warned late Monday that it would miss its revenue target by a wide margin due to slow spending by customers in North America and Western Europe.

The company, which helps operators encode and package video for multiple types of screens, said it expects second-quarter revenues to be in the range of US$10 million to $11 million, versus previous guidance of between $17 million to $18 million. Shares were down $3.06 (53.73%) to $2.64 each in morning trading Tuesday.

Envivio counts Time Warner Cable Inc. (NYSE: TWC) as a customer and Ericsson AB (Nasdaq: ERIC) as a major channel partner. But its channel partner Huawei Technologies Co. Ltd. made up 18 percent of its first-quarter revenues. On the company's first-quarter call, Envivio CEO Julien Signès said the company closed a deal with a Tier 1 North American operator that is not Time Warner Cable. Envivio is scheduled to post second-quarter numbers on Sept 6.

Why this matters
Envivio's life as a publicly traded company is off to a rocky start thanks to a combination of a tough economy and lumpy sales. After a year-long delay, Envivio went forward with an IPO in late April only to see its stock drop 5.7 percent on opening day. Market conditions combined with Envivio's recent results could keep other similar, private companies with IPO ambitions, including RGB Networks Inc. , on the sidelines.

• Envivio Pulls the IPO Trigger
• Envivio Goes for IPO Glory
• RGB Relights Its IPO Fire

— Jeff Baumgartner, Site Editor, Light Reading Cable