Amid the dearth of activity during the slow holiday week, F5 Networks Inc.’s announcement sticks out like a sore thumb.
The provider of Internet traffic and content management services Thursday warned Wall Street that its revenue and earnings for its first quarter, ending Dec. 31, would fall well short of expectations due to weakness in the infrastructure market. As a result, its stock plunged more than 20 percent on twice its average daily volume.
The Seattle-based company said revenue is expected to fall in the range of $24 to $26 million, reflecting a loss before taxes of about 48 cents to 50 cents per share, exclusive of restructuring charges. Analysts had been anticipating earnings of 17 cents per share.
“Sales in the current quarter have trailed our expectations mainly due to the slowdown in purchasing of infrastructure-related equipment,” said John McAdam, president and chief executive officer of F5 Networks. “Market conditions in North America have softened rapidly, but we are confident that our ability to compete in the Internet traffic management and content delivery market will remain strong.”
Steve Goldman, vice president of Sales and Services, said the slowdown is centered in North America and is across the board — from dot-coms to core enterprises. However, he noted that in terms of enterprises, sales have not been lost. Rather, projects have delayed.
“The spending cut was really the cause,” Goldman said. “The one trend that stayed pretty consistent is our win rate versus the competition.”
McAdam added, “What we don’t know is the timing of these delays — how long they’re going to last.” He promised more details during the conference call that will accompany F5 Networks’ first quarter earnings release. The company also said it would revise fiscal 2001 guidance at that time.
McAdam said F5 Networks should finalize its restructuring plans by next week, at which point it will announce a number of lay-offs and facilities consolidations.
F5 Networks’ stock was trading at $10.56 in midmorning trading Thursday, down 23.2 percent from its open of $13.81. F5’s 52-week high of $160.50 was set back on Nov. 1, 1999.
