Extreme lowers revenue guidance

Ethernet equipment vendor Extreme Networks this week lowered expectations for its fiscal third-quarter earnings, citing revenue shortfalls in the United States and Japan.

Though the company previously anticipated revenue for the quarter ending April 2, 2006, to fall between $90 million and $95 million, it now expects between $84 million and $85 million. It expects its earnings per share for the quarter to fall between a $0.01 profit and a $0.01 loss, down from the $0.05 net income reported last quarter.

The new guidance represents a roughly 9% to 10% sequential revenue drop and an 8% to 9% decrease from a year earlier.

Lackluster revenue growth has become a problem for Extreme, which reported disappointing results for its fiscal second quarter in January. In what is typically a strong quarter, Extreme’s revenue was down 5% from a year earlier and well below analysts’ expectations. U.S. revenue, which accounts for about a third of the company’s total revenue, was down 19% sequentially that quarter and down 26% from a year earlier, to nearly $32 million.

Recent media reports have described Extreme as likely candidate to be acquired by larger equipment vendors with an interest in the carrier and enterprise Ethernet equipment markets.

The company will report its fiscal third-quarter earnings on April 25, 2006.