Downgrade Clips Terayon's Wings


Terayon stock plunged 32% in the days leading to Dec. 9 ($2.04 per share), still reeling from an analyst downgrade and unable to stop the decline after it reiterated its fourth-quarter guidance.

Deutsche Bank Securities downgraded Terayon to "sell" from "hold" on Dec. 5, stating that Terayon's ability to capture the cable-modem termination business has diminished. That report sent the stock down 21%, to $4.55 on Dec. 5. On Dec. 8, Terayon reiterated its fourth-quarter guidance in an effort to boost the stock, but it proved to be short-lived. Terayon shares rose 2 cents to $4.57 on Dec. 8, falling back to $4.26 on Dec. 9.

Terayon said it expects fourth-quarter revenue to be $40 million to $43 million, with a net loss in the range of 7 cents to 9 cents per share. The company also reconfirmed it expects to end the fourth quarter with a gross cash and short-term investments balance of approximately $136 million.

Most analysts had expected net losses to be about 9 cents per share on revenue of $41.6 million.

Terayon will release its fourth-quarter results on Jan. 27, after market close.