Extreme Networks shares tumble after missing the Street's 2Q revenue estimate

The maker of network infrastructure equipment Extreme Networks (NASDAQ:EXTR) saw its shares plunge in early trade after missing the Street’s second-quarter revenue estimate, but beating its earnings forecast.

The company on an adjusted basis reported net income of US$24mln or US$0.20 per share while its revenue swung to US$278.3mln.

Wall Street had expected Extreme to earn US$0.19 on revenue of US$279.22mln.

The results failed to please investors who sent Extreme shares spiraling downward by 33% to US$6.06 in morning trade.

Extreme provides network infrastructure equipment and services to an array of businesses, universities and government agencies.

CEO Ed Meyercord is betting that the company’s end-to-end networking strategy, which extends from providing wireless services to cloud datacenters, will drive its growth and margin expansion.

But Meyercord described Extreme’s sales efforts as disappointing in the second quarter.

“We are resetting expectations for our data center business, and are taking swift action to rebuild our sales pipeline after a disappointing fiscal fourth quarter, while celebrating some key wins,” he said in a statement.

On its list of victories are new contracts to connect classrooms at City University of London, the American School of Dubai, Rivier University in New Hampshire and Chungbuk National University in South Korea.  Metro Trains in the city of Melbourne in Australia has also selected Extreme to provide the technology to support its CCTV and video system.

CEO Meyercord expects the company will see as much as US$98mln worth of cross-selling opportunities in fiscal 2019.

“With a growing pipeline of cross-sell opportunities, we have more evidence now than ever before that our end-to-end networking strategy from the wireless edge to the cloud data center will drive overall growth and margin expansion at Extreme,” he concluded in a statement.

Contact Ellen Kelleher at [email protected]

Story by ProactiveInvestors