Newbridge has issued a profit warning, the second during its fiscal second profit warning. year, this time blaming inefficient order fulfilment processes.
For its fourth quarter ended 2 May, Newbridge admitted that it expects to achieve revenue of $460 million, with earnings per share of between $0.12 and $0.14. This estimate falls short of earnings per share of $0.21, expected by analysts polled by First Call.
Alan Lutz, president and chief operating officer at Newbridge Networks, maintained that although orders in Europe and the Americas increased by 30 per cent and 35 per cent, respectively over the past quarter, the vendor's order fulfilment was not good enough to predict future sales.
The ATM switch supplier achieved two-thirds of its sales during the last month of the quarter and to accommodate this demand, it had to pre-build equipment and add modifications when the order arrived. This requires organising extra manufacturing capacity and the creation of incentives for sales staff to order early.
Lutz said: 'Our control of this activity is not robust enough to allow us to generate consistently predictable results and must be changed.
'To add credence to this conclusion is the fact that one minute after the quarter closed, we still had orders from customers, amounting to $115 million, but we had run out of time,' he admitted.
Newbridge is expected to announce its results on 1 June.
The company fell below analysts' expectations by five cents for its fiscal third quarter by reporting earnings per share of $0.17. Net income was $120.1 million and revenue $451 million. Newbridge blamed weak sales in Latin America and Asia during that quarter.
Last month, Network Associates' channel strategy came under fire following the vendor's decision to downgrade its targets in response to a sales slump (PC Dealer, 28 April). At the time, the company admitted it would not take 'significant' channel orders during the second quarter.
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