* Co says no clarity on Clearwire's future equipment needs
* Dundee downgrades stock; Raymond James cuts price target
* DragonWave shares fall as much as 23 pct
(Recasts; adds Dundee comments, details from conference call, updates share movement)
July 8 (Reuters) - Shares of DragonWave Inc fell as much as 23 percent on Thursday, a day after the Canadian telecoms equipment maker said it expects lower second-quarter revenue as orders from its key customer taper off.
DragonWave, which develops broadband wireless backhaul equipment, is helping Clearwire Corp roll out a 4G WiMax-based network in the United States.
The second-quarter outlook reflects that DragonWave has already supplied most of the equipment to Clearwire's network build to the end of 2010, Chief Executive Peter Allen said on a conference call with analysts.
DragonWave's microwave radio systems move voice and data between cell phone towers and phone companies' networks.
'We do not have sufficient visibility into the timing of Clearwire's future equipment requirements from DragonWave for its network build beyond 120 million POPs,' Allen said.
'We have not reflected any incremental revenue from Clearwire in our second-quarter revenue guidance beyond what we have currently booked as orders on hand.'
On Wednesday, DragonWave forecast second-quarter revenue of $25 million, compared with analysts' average estimate of C$48.3 million ($46.1 million), according to Thomson Reuters I/B/E/S.
DragonWave said it expects Clearwire to contribute 25 percent of the total revenue in the second quarter, down from about 77 percent last year.
Dundee analyst Tom Astle downgraded the stock a notch to 'sell,' and said with DragonWave's 'biggest customer dropping from about $38 million to $6 million in one quarter,' it will make things very challenging for the company, especially on the profitability side.
'Given this news, we see no need for tech investors to own this name at current levels,' Astle wrote in a note to clients.
Earlier, Raymond James slashed its price target on shares of DragonWave to C$4.75 from C$7.50.
Analyst Steven Li of Raymond James reduced his fiscal 2011 earnings estimate to C$130 million, or 32 Canadian cents a share, from C$156 million, or 54 Canadian cents a share.
Li, however, kept his 'market perform' rating on the stock and said he still believes DragonWave has a competitive product in the long term. DragonWave shares were down C$1.00 at C$4.84 Thursday morning on the Toronto Stock Exchange.
($1=1.047 Canadian Dollar)
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal) Keywords: DRAGONWAVE/ (bhaswati.mukho@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: bhaswati.mukho.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
* Dundee downgrades stock; Raymond James cuts price target
* DragonWave shares fall as much as 23 pct
(Recasts; adds Dundee comments, details from conference call, updates share movement)
July 8 (Reuters) - Shares of DragonWave Inc fell as much as 23 percent on Thursday, a day after the Canadian telecoms equipment maker said it expects lower second-quarter revenue as orders from its key customer taper off.
DragonWave, which develops broadband wireless backhaul equipment, is helping Clearwire Corp roll out a 4G WiMax-based network in the United States.
The second-quarter outlook reflects that DragonWave has already supplied most of the equipment to Clearwire's network build to the end of 2010, Chief Executive Peter Allen said on a conference call with analysts.
DragonWave's microwave radio systems move voice and data between cell phone towers and phone companies' networks.
'We do not have sufficient visibility into the timing of Clearwire's future equipment requirements from DragonWave for its network build beyond 120 million POPs,' Allen said.
'We have not reflected any incremental revenue from Clearwire in our second-quarter revenue guidance beyond what we have currently booked as orders on hand.'
On Wednesday, DragonWave forecast second-quarter revenue of $25 million, compared with analysts' average estimate of C$48.3 million ($46.1 million), according to Thomson Reuters I/B/E/S.
DragonWave said it expects Clearwire to contribute 25 percent of the total revenue in the second quarter, down from about 77 percent last year.
Dundee analyst Tom Astle downgraded the stock a notch to 'sell,' and said with DragonWave's 'biggest customer dropping from about $38 million to $6 million in one quarter,' it will make things very challenging for the company, especially on the profitability side.
'Given this news, we see no need for tech investors to own this name at current levels,' Astle wrote in a note to clients.
Earlier, Raymond James slashed its price target on shares of DragonWave to C$4.75 from C$7.50.
Analyst Steven Li of Raymond James reduced his fiscal 2011 earnings estimate to C$130 million, or 32 Canadian cents a share, from C$156 million, or 54 Canadian cents a share.
Li, however, kept his 'market perform' rating on the stock and said he still believes DragonWave has a competitive product in the long term. DragonWave shares were down C$1.00 at C$4.84 Thursday morning on the Toronto Stock Exchange.
($1=1.047 Canadian Dollar)
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal) Keywords: DRAGONWAVE/ (bhaswati.mukho@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: bhaswati.mukho.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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