Powerwave Makes Power Move

It boosts guidance, setting off a buying frenzy.
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Powerwave (PWAV) shares jumped 10% after the company said sales in the current quarter should come roaring back.

After missing lowered guidance in the first quarter, the Santa Ana, Calif., wireless infrastructure supplier provided investors and analysts with a much rosier outlook on an earnings conference call Tuesday. The company now expects second-quarter orders to pick up and sales to increase about 30% sequentially to $250 million.

The company also gave earnings guidance calling for a profit between 11 cents and 14 cents a share. Analysts were looking for a 15-cent profit on $249 million in revenue, according to Reuters Research.

For the year, Powerwave expects earnings of 75 cents a share on sales of $1 billion. This compares with the 63-cent profit on $1.01 billion that Wall Street is looking for.

After the market's close Tuesday, Powerwave posted a net loss of $2.3 million, or 2 cents a share, on sales of $193 million for the quarter ended in March. Excluding charges and writedowns, the company's pro forma profit was 3 cents a share.

Those numbers compare with adjusted earnings of 8 cents a share on $162 million in revenue.

Investors cheered the company's return to course Wednesday. Powerwave warned last month of a 20% first-quarter sales shortfall at the hands of a sudden slowdown in orders from big customers like

Cingular

, a joint venture between

AT&T

(T) - Get Report

and

BellSouth

(BLS)

. The shares fell 21% to $10.40 the day after the warning.

But not all industry watchers viewed the new second-quarter projections as a heroic turnabout.

"They reset the bar on much lower expectations," says one hedge fund manager who has no position in the shares. "I really don't see this stock going much higher than $13 to $14."

Powerwave rose $1.17 to $11.90 in midday trading Wednesday.