) to neutral from outperform.
The maker of wireless handset modules known as WISMO modules announced a fourth quarter revenue shortfall, saying TCL Mobile of China cancelled orders. Wavecom also suspended deliveries to a major Korean customer.
Analyst Peter Richardson says given the uncertainty around TCL of China, and the company's clear lack of insight into the channel, he downgraded the shares and cut the $46 target to $20. He notes management pointed to inventory at TCL as the reason behind cancelled orders, but TCL denied this, and said it canceled orders due to its desire to bring down component costs.
Richardson says the news was disappointing, given the feedback he got last week from management on the health of Wavecom's relationship with TCL. He cut the $2.74 2002 earnings per share estimate to $2.35, and cut the $3.35 2003 estimate to $2.41.