Tom Sweeney

It's a coming of age tale….

DragonWave Q2 profits fall 78.9%

Posted by sweens on October 13, 2010

But year-to-date numbers still strong

Packet microwave radio systems supplier DragonWave Inc. reported a sharp reduction in second-quarter earnings late Wednesday as net earnings slipped to $1.2 million, compared to $5.7 million a year earlier.

Revenues were also down, falling to $27.2 million from $32.4 million in Q2 of the company’s fiscal 2010 year.

Despite the disappointing results – which come a week after one analyst advised his clients to ditch the Ottawa-based company’s shares – DragonWave president and CEO Peter Allen said he was “satisfied” with firm’s progress in strengthening its market presence and expanding its base of customers and partners.

“The global demand for mobile broadband Internet services continues to expand – we are still in the early stages of the growth potential for DragonWave mobile backhaul solutions in markets throughout the world,” Mr. Allen said in a statement.

The company’s fiscal year-to-date figures painted a more positive picture. Revenue in the first six months of fiscal 2011 was $75.9 million, a 67-per-cent increase over the previous year.

Profits more than doubled, from $3.4 million to $10.9 million.

In recent months, critics have highlighted how a single customer, wireless broadband services firm Clearwire, provides the lion’s share of DragonWave’s revenues. Clearwire recently slowed its pace of orders from DragonWave, prompting concerns from investors.

In its quarterly financial summary, DragonWave (TSX:DWI) noted it had two customers that each contributed more than 10 per cent of its revenues.

The company is forecasting $30 million in third-quarter revenues.

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