DragonWave reduces 2016 Q2 guidance again

For the second time in two months, Ottawa-based DragonWave has reduced revenue expectations for the second quarter of its fiscal 2016.

Late Friday, the packet microwave radio system provider issued a statement saying it now expects to report revenue of $27.5 million for the three months ending Aug. 31, a sequential quarterly revenue growth of four per cent.

Initially, DragonWave (TSX:DWI)(NASDAQ:DRWI) had forecast sequential quarterly revenue growth of between 30 per cent and 60 per cent. Then on July 8, it revised that to say growth would be closer to 30 per cent than 60 per cent.

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The company said equipment and service orders in the second quarter were $3.4 million lower than expected, although roughly half those orders are now expected in the third quarter. Also, $2.8 million worth of shipments have been delayed and will now happen in the next quarter.

DragonWave said a small amount of the variance was due to a problem with a product that was to be rolled out to a large carrier in India. While the company said the problem has been resolved, the deployment is still suspended.

“Q2 has obviously been a very challenging quarter for DragonWave,” president and CEO Peter Allen said in a statement. “We are developing the plan for moving forward and anticipate sharing that plan on our next regularly scheduled investors’ call.”

Those second-quarter challenges also include dwindling revenue from the company’s Nokia channel, the recent resignation of chief financial officer Russell Frederick and Nasdaq’s move to transfer DragonWave shares from its global market to its capital market. If the company’s share price fails to stay above US$1 for a 10- to 20-day period by Feb. 29, 2016, DragonWave risks seeing its stock delisted.

On Tuesday, DragonWave’s shares were down 10 per cent to 18 cents in early morning trading on the Nasdaq.

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