Tut misses lowered revenue bar

Tut Systems reported second-quarter revenue today that was even lower than the amount it predicted last month, when the company warned of its second quarterly earnings shortfall this year.

The company’s revenue fell 16% from a year earlier and 30% sequentially to $8.1 million in the second quarter. That amount does meet the revised revenue expectation Tut announced late last month, two weeks after it warned of the second-quarter shortfall. And its net loss increased 2% from a year earlier to $4.6 million, though on a per share basis, the loss decreased from $0.17 to $0.14 per share.

In July, the company said it expected to report $8.2 million in second-quarter revenue, a 35% drop from its previous expectation. The company blamed the shortfall largely on delays developing new video set-top boxes capable of MPEG-4, a new generation of video compression technology. The company also reported problems ramping up its new T2 product for multitenant broadband systems.

At the time, Think Equity Partners analyst Eric Kainer said in a research note, “We believe this [earnings warning] is a temporary blip while we await the far bigger news regarding a major U.S. [Bell company] opportunity, to be decided this year.”

Tut’s Chairman and CEO Sal D'Auria was also optimistic, saying last month, ““Our [sales] funnel is getting bigger. Things have been pushed out, but they have not gone away.”

Though the company was very optimistic about its progress with one large potential customer in particular--a tier-one carrier--it was unsure of the likely timing of that carrier's purchase decisions. As a result Tut did not include assumptions of revenue from any tier-one customers in its expectations for the third quarter. Tut expects third-quarter revenue between $8.2 million and $8.5 million.

D'Auria promised a return to growth in the third quarter and even stronger results in the fourth quarter.

Revenue from Tut’s video processing gear was down 1% from a year earlier to $6.8 million in the second quarter. Revenue from private broadband products was down nearly 8% from a year earlier to $1.2 million. And revenue from legacy products obtained through Tut’s acquisition of Copper Mountain Networks was down 93% from a year earlier to $100,000.

About 10% of the quarter’s sales were international, compared with nearly 16% a year earlier.

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