Extreme Networks' (EXTR) stock fell close to 15% Tuesday after the company lowered quarterly revenue expectations.
Extreme expects to log $66 million in sales in its current first fiscal quarter. Wall Street was expecting revenue to come in at $80 million.
"Our supply chain was constrained during the quarter, impacting our ability to deliver product, close transactions and recognize revenue. Our North America business was particularly soft, as some deals were lost and others were delayed beyond the end of the quarter," said Mark Canepa, president and CEO of Extreme Networks, in a statement. "I am disappointed that we did not execute to our advantage.”
Some analysts blamed the shortfall on poor execution and stiffening competition in LAN switching from Cisco, Brocade, HP, 3Com and Juniper. 3Com just recorded a first quarter in which revenue and earnings per share exceeded guidance and consensus analyst estimates.
Extreme's sinking stock price -- at press time it was trading at $2.45 per share, down $.42, with a market cap of $218 million -- may make the company an attractive takeover target. Some on the blogosphere speculated that storage adapter company QLogic should acquire Extreme to bulk up its 10G Ethernet portfolio for the data center, thus making QLogic more of an attractive acquisition target.
Slideshow: 2009's hottest tech M&A deals
Merger and acquisition activity in the data center arena is expected to heat up following reports that Brocade has put itself up for sale.
Reprinted with permission from Networld World. Story copyright 2009 Networld World Inc. All rights reserved.
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