Foundry issues second profit warning
Networking stock prices dive due to telecoms slowdown
Shares in US networking equipment maker Foundry Networks almost halved in value yesterday after it issued a second profit warning.
Foundry, which completed a highly-successful IPO in 1999, said its earnings would be well below even the lowered expectations it had set in an earlier profit warning. The firm's second revision of fourth quarter results put its estimated net revenue at between $100 million and $110 million.
"These latest projections, modified from earlier higher projections, reflect a shift over the last few weeks in the pattern of communications infrastructure capital spending," said Bobby Johnson, Foundry's chief executive officer.
Foundry has attracted attention as one of the new breed of Gigabit Ethernet firms whose equipment offers a performance lead over Cisco Systems. Consolidation in the US telecoms market has resulted in a slow-down of demand for the high-end networking equipment Foundry supplies.
In after-hours trading Foundry's shares dropped from $33 to $16.75. Other networking players were also affected by the news with shares in Cisco falling 6 per cent and Juniper Networks 19 per cent. ®