"We do remain very optimistic that demand should increase as expected throughout the remainder of the year," Ronald Buschur, President and Chief Executive, Powerwave Technologies Inc. (PWAV) (4/3/06)
Well, let's hope so. The provider of antennas, boosters, combiners, filters, and advanced coverage solutions for the cellular, PCS, and 3G industries just cut its forecast revenues for its first quarter which ends April 2 to between $190 and $200 million. The old forecast was for $240 to $250 million, so it's a big miss.
Powerwave has been on a torrid pace. Its revenue for the quarter ending January 1 was $259 million, up from $218 million in the quarter that ended October 2, 2005. For the fiscal year ending January 1, revenue was $825 million up from $474 million the year before. And, for the recent year, the company had operating income of $52 million.
The company's stock really hasn't run up much given past results. It traded a little below $7 a bit less than a year ago, and, with the beating it is taking today, the stock is back to $11.25. According to Yahoo! Finance, the median price target for the company before the big miss was $17. So, in the blink of an eye, you can buy it for the new low price of just above $11.
A little over a month ago Forbes interviewed Piper Jaffray analyst T. Michael Walkley about Powerwave. He thought the company would grow faster than its competitors, and pointed to strong relationships with Cingular, T-Mobile, Sprint/Nextel (NYSE:S), and Verizon (NYSE: VZ) as evidence. Walkley also likes the company's position in China.
If we are to believe management, this is a temporary problem. For those who dive in at the lower price and for Mr. Walkley and Mr. Buschur, let's hope so.
PWAV 1-yr Chart
Douglas A. McIntyre was Editor-in-Chief and Publisher of Financial World Magazine. He was also president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at firstname.lastname@example.org.