A severe profit warning has sent the share price of Allot Communications Ltd. (Nasdaq:ALLT; TASE: ALLT) tumbling on the Tel Aviv Stock exchange today. The company's share price is currently nearly 12% off in Tel Aviv.
The broadband solutions company says that, on the basis of preliminary estimates, it expects revenue in the second quarter of 2015 to be in the range of $21-$22 million. This is substantially below the analysts' consensus estimate of $30.4 million. It represents a decline of 25-29% in comparison with the corresponding quarter of last year, and of 29-32% in comparison with the previous quarter.
Allot now expects 2015 revenue to range between $100 million and $105 million, which compares with an analysts' estimate of $126 million, and represents a 10-15% decline in comparison with 2014.
In fact, on an organic basis, the decline is even sharper, since early this year Allot acquired Spanish data security company Optenet, which was supposed to add several million dollars to its annual revenue.
The decline in revenue will affect the company's profitability. Allot says it expects to generate a net operating loss in the quarter.
On the positive side, Allot's book to bill ratio in the second quarter was above 1 and cash reserves at the end of June were approximately $120 million, which is slightly less than at the end of the previous quarter, and about half the company's market cap.
"We are disappointed by the second quarter preliminary results and attribute this weakness to lower bookings in the first quarter as well as delays in closing certain deals during the second quarter," said Allot president and CEO Andrei Elefant, CEO and President of Allot Communications. "During the second quarter, our bookings rebounded and included three wins totaling approximately $8 million from new Tier-1 mobile operators. We expect initial revenue recognition from these wins during the second half of 2015."
And indeed, to sweeten the pill, Allot announced today that it had won contracts that it described as strategic, worth a total of $8 million.
The orders are from a new Tier-1 mobile operator in Asia Pacific, a new multinational, Tier-1, mobile operator based in Latin America, and a new Tier-1 Mobile operator in EMEA. In addition, Allot has received further orders for security solutions.
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2015
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