ASC cuts staff, forecasts

Continuing the trend of forecast adjustments and staff cuts, Advanced Switching Communications revealed Monday that it also is suffering. The company plans to reduce its work force by 20% and changed its revenue forecast for the second quarter from $13.5 million to a mere $1 million.

“We are very disappointed,” said Asghar Mostafa, president and CEO of ASC. “We are taking immediate steps to lower our cost structure.”

ASC attributed its 92.5% misread in revenue to an expected customer order not coming through.

“The shortfall is due to our failure to receive a large and expected purchase order form a major customer in the final days of the quarter,” Mostafa said.

Additionally, Mostafa noted the continued weakness in the telecommunications equipment market. That weakness is evidenced in the company shifting its normalized-loss estimates for the second quarter from 5 cents per share to 20 or 21 cents per share.

Despite the fact that the outlook appears bleak for ASC, Mostafa said the company is on solid financial footing. The company has more than $90 million in cash, and its balance sheet is almost debt-free, according to Mostafa.

“We are in a strong position to weather the current market,” Mostafa said.

However, investors reacted negatively to the news, causing the company’s stock price to drop 46% before closing Monday at $1.57 per share. In midday trading today, the stock was trading at $1.47 per share.

ASC plans to report its second quarter results on July 19.