Comverse Technology Lowers Guidance, Drags Down Openwave

Comverse Technology (CMVT Quote) lowered its guidance for the second quarter and for the rest of the year, pointing to the continuing capital spending and economic slowdown.

The company forecast sales of about $345 million for the second quarter ending July 31. Comverse expects earnings of about 28 cents a share, before a charge of up to $9 million for recent job cuts. The estimate also excludes costs of up to $15 million for the writedown of investments. According to Thomson Financial/First Call, analysts expect earnings of 43 cents for the quarter.

Comverse, a maker of software for Internet and wireless communications services, projected third-quarter sales of $330 million and earnings of 20 cents a share. For the fourth quarter, the company expects a top line of $340 million with income of 23 cents. If the company meets its latest guidance, sales for the full fiscal year would total about $1.38 billion and earnings would come in at $1.14 a share. Wall Street is looking for third-quarter earnings of 45 cents and a fourth-quarter bottom line of 48 cents. For the full year, analysts are calling for income of $1.79.

Next year, the company expects 5% sequential quarterly sales growth, which would lead to revenue of about $1.53 billion. Comverse also forecast earnings per share growth of 20%, to $1.37, a result that would be well below the consensus earnings estimate of $2.12 a share.

In premarket action on Instinet, Comverse was the most actively traded issue. The shares lost 31% to $27 before the bell. One of the company's competitors, Openwave Systems (OPWV Quote), also lost ground, dropping 22% to $18.80.