Markets & Finance

Banc of America Downgrades Foundry Networks

Banc of America downgrades Foundry Networks (FDRY) to neutral from buy.

Analyst Tim Long says Foundry's $84 million first-quarter revenue guidance was below his $104 million estimate. He says the shortfall is a result of market losses, declining margins, and high exposure to choppy federal government spending (about 25% of company's sales).

He notes this is consistent with Enterasys Networks (not rated) shortfall last week and is most likely a sign that Cisco Systems (buy) is gaining market share.

Long cuts his 48 cents 2005 earnings per share estimate to 32 cents, and 51 cents 2006 earnings per share estimate to 38 cents. He lowers his $13 target price to $8.

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