Reality Check at Netopia

Netopia ( NTPA) threw more cold water on the broadband-equipment space Tuesday night, saying price increases in parts it uses for Internet modems and routers would result in a third-quarter loss that is about four times wider than analysts were forecasting.

Emeryville, Calif.-based Netopia expects to lose 11 cents to 13 cents a share before amortization charges on revenue of $25.3 million and $25.6 million in the three months to June 30. Analysts surveyed by Thomson First Call were forecasting a loss of 3 cents a share on revenue of $24.4 million.

The stock, which fell 8.5% in regular hours trading, was recently down another $1.36, or 22%, to $5.83 on the Instinet late session. The 52-week range is $4.02 to $20.15.

Netopia blamed crimped margins for the wider-than-expected loss, saying higher prices for flash storage and standard memory, and lower average selling prices would result in third-quarter gross margin of 31% to 32%, down from 40.5% last year. The company is also going to expense a $750,000 bad debt charge related to a software reseller in the period.

The warning comes the same day that Conexant ( CNXT), which makes chips for Wi-Fi applications, predicted a shortfall, spawning a selloff throughout the communication chip sector. Conexant fell $1.77, or 43%, to $2.31, while PMC Sierra ( PMCS) lost 89 cents, or 6.9%, to $12.06 and Advanced Micro ( AMCC) lost 49 cents, or 10.2%, to $4.31.

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