Sunnyvale, Calif.-based Adaptive Broadband Corp. lowered its revenue expectations for the fiscal second quarter ended Dec. 31, calling into question its pending acquisition by Western Multiplex Corp. and causing its shares to dip nearly 50 percent immediately following the news.
The revenue adjustment was due in large part to a deferral of $13 million in contracted shipments of Adaptive Broadband’s AB-Access product to a major domestic customer. Adaptive Broadband estimates it now will realize approximately $8 million in revenues for the quarter, compared with $2 million for the same period last year.
In the company’s first-quarter financial results announcement, it indicated a revenue growth goal greater than 30 percent each quarter, which, if realized, would have resulted in more than $31 million in revenues for the second quarter.
Adaptive Broadband said it recently made a $15 million investment in Fuzion Technologies Inc., driven by the intent of both companies to capture wireless market opportunities. Recent business developments and financial issues between the two companies have caused a delay in the $13 million shipment and the payment to Adaptive Broadband for a $12 million overdue receivable from a subsidiary of Fuzion, the company said.
“As the second quarter progressed, we became more dependent on emerging international customer opportunities, but these did not offset the shortfall in both new domestic customer opportunities and delays affecting our existing U.S. customers,” said Daniel L. Scharre, Adaptive Broadband’s president and chief operating officer. “The current weakness in this market highlights our need for expanded sales channels, which we have been aggressively pursuing.”
Western Multiplex said in November it intended to acquire Adaptive Broadband for approximately $645 million in stock. The company now intends to re-evaluate the situation.
“We are obviously disappointed to hear Adaptive’s latest news,” said Jonathan Zakin, chairman and chief executive officer of Western Multiplex, in a statement. “These adverse developments in Adaptive’s results and prospects are material, and we intend to evaluate all of our alternatives with respect to the proposed transaction in light of this new information.”
On Wall Street, shares on Adaptive Broadband took yet another beating. Prices dropped from $6.13 per share at closing last Tuesday, to close at $3.19 the following day. Shares of the wireless broadband equipment provider have traded as high as $104.88. The company’s shares were trading at $3.38 at RCR Wireless News press time.
