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Ikanos Communications Warns

The company delivers two quarters' worth of bad news.

Manufacturing problems and weakness in the overall communications market drove

Ikanos Communications


to cut its sales outlook after the bell Wednesday.

Following the announcement, the stock plunged 36% in after-hours trading, losing $3.94 to $7.

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The Fremont, Calif., maker of broadband-network-equipment chips warned investors that revenue in the quarter ended Sept. 30 will likely range between $36 million and $37 million, instead of the $40 million to $43 million outlook it provided in July.

The company also delivered a revenue outlook for the fourth quarter underway that fell well below the Street's consensus, pegging sales between $24 million and $26 million. Analysts polled by Thomson Financial were expecting Ikanos to generate $43.3 million in fourth-quarter revenue.

Ikanos cited product delays and manufacturing constraints for its third-quarter shortfall, despite what it said were orders for its new chipset products.

"Looking ahead to our fourth quarter, we believe that revenue will be affected due to the general weakness in the overall communications sector and some deployment delays," said CEO Rajesh Vashist in a press release.

"Additionally, carriers in Japan are currently working through their existing equipment levels, thus impacting our Q4 revenue. We believe this will largely be resolved by the end of the year," Vashist said.