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Rough Ride for RadiSys

Shares tumble after the software company gives a weak projection for the fourth quarter.

Shares of


(RSYS) - Get RadiSys Corporation Report

plunged 13% Friday after the maker of computer systems posted disappointing third-quarter results and gave a fourth-quarter guidance well below expectations.

The company swung to a third-quarter loss of $13.3 million, or 62 cents a share, from a year-earlier profit of $5.9 million, or 25 cents a share. Results were weighed down by charges related to an acquisition.

Excluding charges, the company posted adjusted third-quarter earnings of $4.6 million, or 18 cents a share. The earnings per share on this basis were a penny below the average analyst estimate, according to Thomson First Call.

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RadiSys recorded revenue of $81.4 million, well short of Wall Street's forecast of $85 million. The company's own guidance had called for revenue of $80 million to $85 million.

During the year-earlier period, RadiSys earned $5.8 million, or 24 cents a share, on revenue of $74.9 million.

Looking ahead, RadiSys forecast a fourth-quarter adjusted loss of 4 cents to 9 cents a share, on revenue of $57 million to $63 million.

Analysts were expecting a profit of 22 cents a share on revenue of $87.9 million.

"The projected decrease in fourth-quarter revenue is due to recent reductions in requested deliveries from a large wireless customer," the company said. "We believe these reductions are driven by its efforts to significantly reduce inventory levels, including buffer inventories that were used to support a successful RoHS conversion, as well as lowered demand projections for systems into which we supply content."

The company said it doesn't believe there is a fundamental change in its wireless business, and it expects revenue to return to higher levels in 2007, although they will continue to vary quarterly.

Shares recently were down $2.76 to $17.53.