Sonus Networks Earnings Cheat Sheet: Shrinking Margins for Fifth Consecutive Quarter

On top of dropping to a loss in the second quarter, Sonus Networks, Inc. (NASDAQ:SONS) also came in short of analyst estimates. Sonus Networks, Inc is a provider of voice infrastructure solutions for wireline and wireless service providers.

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Sonus Networks Earnings Cheat Sheet for the Second Quarter

Results: Swung to a loss of $5.9 million (2 cents per diluted share) in the quarter. Sonus Networks, Inc. had a net income of $311,000 or breaking even per share in the year earlier quarter.

Revenue: Fell 15.4% to $51.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: SONS fell short of the mean analyst estimate of one cent per share. It fell short of the average revenue estimate of $65.8 million.

Quoting Management: “The team and I remain enthusiastic about our opportunity to grow our business, building on our solid history of technical excellence, strong customer relationships and a healthy balance sheet,” said Ray Dolan, President and Chief Executive Officer of Sonus Networks. “Reiterating our full year guidance underscores our confidence in our growth strategy and our ability to execute for the remainder of the year. The NBS5200, our innovative carrier and enterprise-class Session Border Controller, was recently recognized by TMC as a 2010 Communications Solutions Product of the Year. This product, launched roughly one year ago, is experiencing solid momentum and represents an attractive area of growth for the Company.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 5.1 percentage points to 57.8% from the year earlier quarter. Over that time, margins have contracted on average 7.8 percentage points per quarter on a year-over-year basis.

A year-over-year revenue decrease last quarter snaps a streak of two consecutive quarters of revenue increases. Revenue rose 7.8% in the first quarter and 20.8% in the fourth quarter of the last fiscal year.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 3 cents with a loss of 4 cents versus a mean estimate of a loss of one cent per share.

Competitors to Watch: Alcatel-Lucent (NYSE:ALU), Cisco Systems, Inc. (NASDAQ:CSCO), Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), TEKELEC (NASDAQ:TKLC), Tellabs, Inc. (NASDAQ:TLAB), Ditech Networks Inc. (NASDAQ:DITC), Symmetricom, Inc. (NASDAQ:SYMM), Sycamore Networks, Inc. (NASDAQ:SCMR), Performance Technologies (NASDAQ:PTIX), and Juniper Networks, Inc. (NYSE:JNPR).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock >>

(Source: Xignite Financials)

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