The Ottawa-based telecom equipment firm now projects revenues will be approximately $30 million – a 25 per cent decrease from the low end of the company’s previously forecasted revenue expectations.
DragonWave originally stated that it expected revenues to be in the range of $40 million to $45 million.
Following Monday’s announcement, the company’s stock dropped in value by more than 27 per cent. By market close, its stock had fallen by $0.66 down to $1.75.
The main reason for the shortfall is because of lower revenue from Nokia Siemens Networks – which DragonWave acquired in a deal that closed in November – compared to the previous quarter.
In the release, DragonWave confirmed it has initiated cost improvement measures, without specifying details.
“DragonWave will disclose further details on its cost improvement measures on its quarterly results conference call in May 2013,” chief financial officer Russell Fredrick said in a statement issued to OBJ.
Previous cost-cutting initiatives have included eliminating 48 jobs in Ottawa and Israel last September, and cutting 10 per cent of its workforce in 2011.
The revised revenue expectations have not been reviewed by DragonWave’s external auditors, according to the release.
It’s the second quarter in a row that the company has had to lower its revenue forecasts. Last quarter, when the company posted a $13.9 million net loss, its revenues were slightly below its revenue target despite downgrading its forecast a month earlier.
The revision, however, was less extreme than this quarter – a nine per cent decrease from the low end of the previously forecasted revenue expectations, compared to this quarter’s 25 per cent.
That revision set the company’s stock on a rollercoaster ride in December, plunging more than 12.6 per cent following the revision announcement on Dec. 6 but recovering later in the day.
Despite the market fluctuations, DragonWave exited 2012 in a high note after its stock surged on news that its primary client had accepted a takeover offer.
Clearwire, an American mobile carrier building the first 4G network in the world, recently agreed to a takeover offer from Sprint, which is buy the remaining 49 per cent of the company that it doesn’t already own for $2.2 billion.