Aruba Networks Inc. (ARUN:US) and Ruckus Wireless Inc. (RKUS:US), makers of wireless-networking equipment, tumbled after quarterly sales fell short of analysts’ estimates as customers postponed purchases.
Aruba shares (ARUN:US) fell 23 percent to $17.02 at the close in New York, the biggest decline since Feb. 8, 2008. Ruckus dropped 26 percent to $14.03, the lowest price since December, the month after the company’s initial public offering.
Aruba, Ruckus and rivals such as Motorola Solutions Inc. are being hurt by slowing demand from telecommunications carriers as well as corporate customers, a category whose sales growth has probably slowed to 10 percent a year from 20 percent, Tavis McCourt, an analyst at Raymond James & Associates Inc., wrote in a note on Aruba today. McCourt cited economic weakness and increased competition.
“A sudden slowdown in April was likely hard for Aruba to adjust for,” wrote McCourt, who rates Aruba shares the equivalent of a hold.
For Aruba’s third quarter, which ended April 30, profit excluding some items was 11 cents to 12 cents a share on sales of $144 million to $147 million, the Sunnyvale, California-based company said today in a statement. Analysts on average had projected (ARUN:US) profit of 20 cents on revenue of $160.6 million, according to data compiled by Bloomberg.
“In April, we saw a push-out in customer orders across the Americas, Europe and Asia,” Aruba Chief Executive Officer Dominic Orr said in the statement. “We attribute this weakness primarily to a challenging economic environment worldwide.”
Aruba said it will release full quarterly financial results on May 16.
Yesterday, Ruckus, also based in Sunnyvale, reported first-quarter sales of $57.2 million, while analysts on average had estimated revenue of $63.4 million, according to data compiled by Bloomberg.
“We believe that the fundamentals, growth drivers and long-term market opportunity for Ruckus remain intact,” Ruckus CEO Selina Lo said in a statement.
During the company’s conference call, she said the company’s first-quarter revenue was “impacted by delayed deployments with several service provider customers in the Americas, as well as challenging market conditions in China.”
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