Viryanet (Nasdaq:VRYA) took a hammering on Wall Street, falling 32% to $1.53 after announcing an severe earnings warning a day before its financial statements is due.

Viryanet said it expects to lose $2.6 million, or $0.98 per share, compared with its previous forecast of earning up to 10 cents per share after equity consolidation.

In its announcement, dated August 5, the company explained that it had ultimately decided against including revenue from "a significant customer transaction".

The company's fiscal quarter ended on June 30, but it only now reported that revenue will be only $1.5 million, compared with its previous expectations of $4.5 million to $5 million.

Its available cash position remained almost unchanged, at $9.4 million including its full line of credit, compared to $9.5 million at the end of the fiscal first quarter.

Viryanet, which develops products to efficiently manage roaming service providers, blamed its results on that one customer and on the general state of the economy and difficult business conditions, resulting in continuing delays in closing deals.

"The economy remains weak and fragile, and IT spending for technology and software continues at lower than normal levels. Despite these difficult market conditions, three significant end user customers licensed ViryaNet software from the company and its partners, demonstrating continuing acceptance of our products", commented Viryanet's president and CEO, Win Burke.

Regarding its 2002 results, the company has not yet updated its forecasts dating from the end of the first quarter. Then it estimated revenues of $25 million to $26 million for the year, and that it will earn 9 to 10 cents per consolidated share.