Carrier Access Feels Consolidation Crunch

Carrier Access (CACS) sagged 18% Wednesday after warning of a sharp second-half revenue shortfall.

The Boulder, Colo., maker of telecom gear forecast a 15%-20% top-line decline from second-quarter levels. The company expects to see a slight rise in fourth-quarter revenue from the third quarter's reduced numbers. Carrier Access blamed the pending consolidation of the North American wireless mobility market, what with Cingular poised to buy AT&T Wireless (AWE) by year-end.

"Consolidation among wireless service providers has resulted in what we believe is a short-term spending decline, as wireless service providers constrain their capital to rationalize their networks," said CEO Roger Koenig. "This is clearly affecting our top line. Although quarterly revenue is anticipated to decline from what was reported in the second quarter of 2004, we believe we are well positioned to increase revenue in 2005 in the wireless market."

Carrier Access posted revenue of $30.5 million in the second quarter, which means it expects revenue of around $25 million-$26 million for the third and fourth quarters. Analysts surveyed by Thomson First Call had forecast revenue of $30.4 million for the third quarter ending this month and $32.4 million for the fourth quarter ending in December.

The setback comes as Carrier Access struggles following a stellar 2003 that saw its stock surge 3,000%. The company slashed earnings guidance in July, citing in part Cingular's sale of network assets to T-Mobile.

Early Wednesday, the stock slid $1.39 to $6.01.

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