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Avanex Misses Hard

Avanex Corp. (Nasdaq: AVNX) shares are down 25 percent in after-hours trading tonight as the company noted it's going to miss first-quarter revenue projections by, well, a lot.

In announcing earnings for its fourth quarter, which ended in June, Avanex noted its first-quarter revenues will be $44 million to $48 million. Analysts polled by Reuters Research were looking for $54.8 million.

The company also disappointed with its earnings for its fourth quarter, which ended June 30. Avanex reported non-GAAP net income of 11 cents per share, while analysts had expected 17 cents.

On a conference call with analysts today, Avanex officials cited three culprits. The market in Asia has slowed down, and Avanex is intentionally reducing sales of some of its lower-margin products.

Avanex also cited "pricing pressure." Earlier in the call, the company had noted it's been getting beaten down on price by one customer related to one older product; it's unclear whether Avanex was saying that specific circumstance contributed to the low forecast.

Avanex stock was down $2.39 (22.9%) at $8.05 in early after-hours trading.

Separately, Avanex said it's not having to delay revenues due to manufacturing limitations. JDSU (Nasdaq: JDSU; Toronto: JDU) had complained of that problem yesterday, saying $10 million in revenues would be delayed by a quarter as its manufacturing tried to keep up with demand. (See Doink! JDSU Hits Capacity Ceiling.)

On a conference call with analysts today, interim CEO Giovanni Barbarossa said Avanex doesn't have a similar problem because of its heavy use of contract manufacturers, which lets the company ramp up capacity quickly as necessary.

— Craig Matsumoto, West Coast Editor, Light Reading

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