March 4, 2013 / 11:35 AM / 6 years ago

DragonWave cuts revenue estimate as sales fall in Nokia Siemens unit

(Reuters) - Telecom network equipment maker DragonWave Inc said revenue for the fourth quarter would miss its forecast, citing lower sales in the microwave technology business it bought from Nokia Siemens Networks last year.

DragonWave shares slid 25 percent to a three-month low of C$1.81 on the Toronto Stock Exchange on Monday.

Ottawa-based DragonWave also said it will cut costs further but did not specify what the measures were. Chief Financial Officer Russell Frederick said he could not provide more information on cost cutting.

National Bank Financial analyst Kris Thompson said in a note to clients that cost cuts could indicate that lower revenue is not temporary. He lowered his price target on the company’s New-York listed stock to $1.75 from $2.00.

The cash-strapped company has been trying to cut costs since the acquisition of the Nokia Siemens unit in May. It cut 116 jobs in Ottawa and Israel in 2012.

The supplier of high-capacity broadband wireless networking systems estimated revenue of $30 million for the quarter ended February 28. It had forecast $40 million to $45 million.

Analysts on average were expecting $41.8 million, according to Thomson Reuters I/B/E/S.

The Nokia Siemens unit contributed $25.6 million, or about 67 percent of DragonWave’s revenue, in the third quarter.

Frederick said in May that the company expects quarterly revenue run rate of about $75 million within a year of closing the Nokia Siemens unit deal. But Thompson said it was unlikely.

This is the second time that Dragonwave has cut estimates in the last fiscal year. DragonWave cut its third-quarter revenue estimate in December on slower-than-expected demand from European customers.

Shares of DragonWave have fallen about 43 percent in value in fiscal 2013. They were down 20 percent at C$1.91 on the Toronto Stock Exchange. The New York-listed shares were down 22 percent at $1.85.

Reporting by Krithika Krishnamurthy in Bangalore; Editing by Don Sebastian

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