Ethernet equipment

Extreme Braces for Collateral Damage

Extreme Networks Inc. (Nasdaq: EXTR) braced investors for a weak September quarter, as officials said Monday that they're preparing the business for worsened Ethernet pricing in some market segments.

For its first quarter, which ends in September, Extreme now expects revenues between $74 million and $80 million, compared with the $86.1 million predicted by analysts polled by Thomson Reuters . Extreme is forecasting non-GAAP net income of $0.02 to $0.05 per share; analysts were expecting $0.06.

Extreme is already cutting 110 employees, trying to rein in costs. (See Extreme Cuts 110 Jobs.)

But the company is also facing a top-line struggle. "Port sales are up in the industry, and revenues are down in the industry, and that means pricing pressure is out there," CEO Oscar Rodriguez told investors on Extreme's earnings call Monday.

Extreme expects particularly vicious price warring in campus networks, driven by "those that are trying to gain market share -- HP Inc. (NYSE: HPQ) and Juniper Networks Inc. (NYSE: JNPR), I think, are good examples," interim CFO James Judson said on the call. "I don't think we're the target," he added, but that wouldn't stop Extreme from taking "collateral damage."

Extreme met analysts' expectations for earnings in the fourth quarter, which ended July 3.

The company reported fourth-quarter revenues of $89.8 million and a net loss of $2.1 million, or $0.02 per share. Analysts were expecting revenues of $85.6 million.

Extreme's non-GAAP net income of $0.02 per share matched the analysts' consensus.

— Craig Matsumoto, West Coast Editor, Light Reading

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