Avaya Stock Falls 50 Percent to All-Time Low
CHICAGO (Reuters) - The shares of communications equipment maker Avaya Inc. (NYSE:AV - News) fell by 50 percent to a new all-time low Tuesday, a day after the company posted a larger-than-expected quarterly loss due to weak spending by corporate customers.
Avaya's stock fell as low as $1.87 and closed off $1.73, or 45.5 percent, at $2.07 in trading on the New York Stock Exchange.
Avaya officials declined to comment on the stock decline.
"We have no visibility that the top line (revenue) will not continue to erode," Credit Suisse First Boston analyst Lissa Bogaty said in a research note.
"We are surprised at the rate of decline of applications and services and concerned that Avaya's largely U.S. business is exposed to what could be a weakening U.S. economy," she added.
Avaya, a former unit of Lucent Technologies Inc. (NYSE:LU - News), said late Monday it expected fiscal fourth-quarter revenue to decline from the third quarter. Revenue fell 4.7 percent quarter-over-quarter in the third quarter ending June 30.
The company, a provider of voice and data networks, also posted a loss before one-time items of 9 cents a share in the third quarter. Analysts had expected a 4 cent loss, according to Thomson First Call.
Bogaty cut fiscal 2002 and 2003 financial estimates, cut her price target to $4 a share from $9, and downgraded the stock to "hold."
Merrill Lynch analyst Sam Wilson also cut his revenue and earnings estimates and said he did not expect Avaya to return to profitability until the middle of next year. He cut his long-term rating to "neutral" from "buy."