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(Nasdaq:AUDC) announced a particularly painful profit warning on March 15, 2001, it has taken the

Prudential Securities

firm until April 4, 2001 to officially respond to the news.

In its report on AudioCodes, considered one of the worst-ever assessments published about a company, the investment house has lowered its recommendation for the share from Buy to Sell.

This is hardly a run-of-the-mill recommendation, especially these days when so many shares are trading at historically low prices. It means that this share certainly hasn't got much chance of rising. Quite the opposite, it can only be expected to fall, and according to Prudential, whoever doesn't sell right now is unlikely to receive a positive return on his investment.

Prudential has also lowered its price target for the share, from $21 per share to $4.5 per share, which is 42% lower than the share's price on the day the report was published.

According to analyst Randy Scherago, AudioCodes' stock will trade in the near future at between $4 to $8 per share, reflecting a company valuation of between $170 million to $340 million. AudioCodes' current company valuation is $331 million.

AudiocCdes suffering from spate of order cancellations

Prudential says that AudioCodes is suffering from a spate of order cancellations and deferments, both from its large and small customers, irrespective of their geographical location. The company itself says it has been hurt by both

Cisco Systems

(Nasdaq:CSCO) and

Alcatel CID

(formerly Newbridge Networks).

AudioCodes itself admits that its first-quarter revenues and profit will be lower than originally forecast. At present the company projects Q1 revenues of between $13.5 million to $15 million, and an estimated earnings per share of between five cents and seven cents. In light of the firm's poor projected results, it has not supplied an annual forecast.

But Prudential forecasts an earnings per share of five cents for the company's first quarter, which is on the borderline of the firm's bottom-end projection. The analysts say they are expecting the entire industry to suffer in the short term, but add that the VoIP market could make a comeback in the first half of 2002.