This week two alternative vendors for the telecom and internet infrastructure market pre-announced, lowering Q4 estimates materially. In the wake of Cisco's weak off-schedule quarter, one wonders if Q4 is indeed looking like a tougher one than usual.
On Monday, Cyan announced preliminary revenue for Q4 2013 of $20-21M, well below the previous guidance of $30-33M. They saw an unexpected drop in sales to their largest customer (Windstream) that made a very big dent in their numbers. Fluctuations in revenue from a highly concentrated customer base are part of the game for smaller vendors, but of course the market took the opportunity to send their stock price down over 30% this week.
After the close on Wednesday, it was Calix's turn to reveal slower than expected Q4 sales. They now expect revenue to fall in the $93.5-94.5M range with non-GAAP earnings per share of $0.02-0.04, down from $97-103M and $0.03-0.08. The reason: "a greater than anticipated decline in traditional year-end “budget flush” customer spending patterns than the company historically has experienced." The news took their stock down 10% yesterday.
The financial weather in the vendor space can shift very quickly. Put these two together with Cisco's revenue worries in the late fall, and perhaps a pattern is indeed emerging with telecoms starting to delay some capex, although Ciena's December report is a counter example. Perhaps it's a blip, or perhaps it's vendor-specific. When Q4 numbers start coming out over the next few weeks, we will get a few more data points.
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