DragonWave shares plunge 10% amid continuing losses

DragonWave (TSX:DWI)(NASDAQ:DRWI) executives say restructuring efforts are improving the Ottawa-based tech firm’s financial picture, even as the company reaches six straight years without turning a quarterly profit.

Investors, however, pushed DragonWave shares down 10 per cent on the Toronto Stock Exchange in midday trading Thursday following the firm's quarterly earnings report. The company's stock recovered some of that lost ground later in the day and ended down 8.54 per cent, or 31 cents, to $3.32 per share.

DragonWave, which sells microwave networking equipment to wireless companies, said late Wednesday that it lost US$3.7 million in the second quarter of its fiscal 2017 year. Revenues plunged by more than half year-over-year to US$13.2 million, down from US$26.9 million in the second quarter of fiscal 2016.

On the positive side, revenues and profit margins have started to climb in recent months.

The company attributes the growth in margins – which rose to 29.2 per cent, up from 14.8 per cent a year earlier – to restructuring its product and customer focus.

‘‘We are pleased with the growth in our direct revenue in the quarter and the progress that we have seen on our renewal and restructuring approach. We expect to continue this progress in coming quarters,” DragonWave president and CEO Peter Allen said in a statement announcing the results.

A US$6.8 million reduction in sales through DragonWave’s Nokia partnership, following the Finnish company’s acquisition of competitor Alcatel-Lucent, continues to drag down DragonWave’s sales growth. Excluding the Nokia(NYSE:NOK) channel, however, revenue grew by 30 per cent compared to the first quarter of 2017.

DragonWave held another public offering in the United States in August, raising US$9.5 million.