Westell Crushed by Shortfall

The modem company cites order-timing issues.
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Westell

(WSTL) - Get Report

plunged 17% Wednesday after the modem maker missed first-quarter estimates and forecast a soft second quarter.

The Schaumburg, Ill., company said it made $4.1 million, or 6 cents a share, for the first quarter ended June 30. That's up from the year-ago $3.3 million, or a nickel a share. Excluding certain costs, latest-quarter earnings were 10 cents a share, which is a penny short of the Wall Street analyst consensus estimate.

Revenue rose 35% from a year ago to $75.6 million.

"We are pleased with the results for the first fiscal quarter of 2006, our thirteenth consecutive quarter of profitability," said CEO Van Cullens. "Growth was primarily driven by our Customer Networking Equipment segment. And, last month we posted a major win, as BellSouth selected our VersaLink wireless gateway product."

But Westell said next quarter would be tougher, due to what it called the timing of customer orders. The company said it would make 3 cents or 4 cents a share on an adjusted basis on revenue of $62.5 million or so. Analysts were expecting earnings of 12 cents a share on revenue of $75.8 million.

"As stated in our May conference call, we were seeing some softening in order forecasts, and our second quarter guidance reflects this condition. A number of factors are contributing to this more conservative outlook including seasonal weakness, changing customer promotional strategies, deferred product transitions and pricing competition. We simply have to work through these short-term issues and seek every opportunity to get our newer products into volume deployments as soon as possible," Cullens said.

Late Wednesday, shares of Westell fell $1.21 to $5.33.