March 24, 2015
Trading of Sonus Networks' stock was halted Tuesday morning after the price crashed in the wake of an announcement that the company would fall well short of projected revenues for the first quarter of 2015, due to the loss of expected orders. (See Sonus Revenues Drop 33%, Cost Cuts Ahead.)
The company, which makes hardware and software for VoIP, messaging, video and collaboration, said in a release that it would not receive orders expected for late Q1, and thus its revenues will slide from a projected $74 million down to a range of $47 million to $50 million. Sonus Networks Inc. (Nasdaq: SONS) says it will lose 29 cents to 34 cents per share, instead of earning a projected three cents per share. Sonus also cut its annual revenue projection by about 25%: Instead of revenue in the range of $325 million to $330 million, the company expects to generate about $246 million.
The news sent the company's share price into freefall and by mid-morning it was down 27% to $9.63.
As a result of the new forecast the company is initiating a company-wide review of costs to bring it back to cash-flow positive status. In its official announcement, Sonus notes that says it has $100 million in cash and securities on hand and is not carrying any debt.
The review comes at a time when Sonus is working to virtualize its product line, having announced earlier this year a virtualized approach to WebRTC and the acquisition of SDN player Treq Networks. It's not yet known how these cuts may affect those efforts, which are aimed at keeping Sonus competitive with players such as Metaswitch Networks and Oracle Corp. (Nasdaq: ORCL) (Acme Packet). (See Sonus Virtualizes WebRTC and Sonus Buys Itself an SDN Story.)
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"Sonus continues to benefit from strong business fundamentals that are underpinned by solid relationships with a growing number of tier one service providers around the world, leading technology and a strong balance sheet," CEO Ray Dolan said in a statement. "These strengths, together with the positive feedback from current and prospective customers, give us confidence that we can move through this period and that Sonus has the right product portfolio and strategy to be the strategic supplier of choice to cloud-based network providers of the future."
The news comes only a day after one financial analyst rated Sonus stock as a "buy." Wunderlick Securities analyst Matthew S. Robinson reiterated his rating, according to this report from Yahoo! Finance, because he still expects high-end demand for the Sonus 7000 session border controller (SBC). Robinson also cited Huawei Technologies Co. Ltd. 's choice of the Sonus SBC as an alternative to the Oracle/Acme Packet platform as a positive factor.
— Carol Wilson, Editor-at-Large, Light Reading
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