Knobias Clip Report (10-29-2008) SNWL
Submitted By Knobias ClipReport
SNWL: Shares Decline on Weak Q3 Report and Guidance
By Fain Hughes, fhughes@knobias.com
Shares of SonicWALL, Inc. (SNWL) were weaker in Wednesday’s session after the Company reported its financial results for the third quarter ended September 30, 2008.
Revenues were $53.3 million, representing 5% growth over the third quarter of 2007. Non-GAAP net earnings for the third quarter of 2008 were $4.1 million or $0.08 per diluted share. In comparison, non-GAAP net earnings for the third quarter of 2007 were $3.9 million, or $0.06 per diluted share.
The Company expects fourth quarter 2008 revenue to be in the range of $50 million to $54 million. The Company expects non-GAAP gross margin to be in the range of 71% to 72% of revenue. SonicWALL expects earnings per share in the fourth quarter of 2008 to be in the range of $0.05 to $0.07 per diluted share on a non-GAAP basis.
Matt Medeiros, CEO of SonicWALL, commented in a conference call, “We have experienced positive cash flow from operations for the last 14 quarters. We have been profitable on a non-GAAP basis for each quarter of the last five years. We have $166 million in cash with no debt. Our balance sheet strength provides us with the stability necessary to stay focused on our strategic objectives which provides assurance to our customers and channel partners.”
He noted, “We had several large deals in this quarter that were postponed and contributed to a weaker than expected Q3. While some of these deals have since closed, we remain cautious regarding the worldwide demand environment.”
Mr. Medeiros explained, “Our UTM product architecture and technology makes us competitive against incumbent vendors such as Juniper and Cisco. Because our products are more affordable and offer a strong advantage in total cost of ownership, SonicWALL solutions represent a compelling alternative to the premium priced offerings in today’s price sensitive economy.”
He concluded, “We remain well aware of market conditions and will continue to execute our strategy. In the coming quarter, we will introduce new products and advance our technical platform, invest in higher growth international markets and improve our operational efficiencies. We believe that our company has never been better positioned.”
Baird downgraded SNWL today to Neutral from Outperform following the weak Q3 report and guidance. The firm also cut the target price for SNWL to $5 from $8.
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