SonicWall Warns Of 3Q Shortfall

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SonicWall Wednesday warned that its third-quarter results will fall short of its expectations due to sluggish IT spending.

The maker of Internet security appliances, based here, said it expects revenue for the third quarter to fall between $23 million and $26 million, compared with $27.8 million for the same quarter a year ago.

SonicWall expects third-quarter earnings per share to break even, compared with First Call consensus estimates of earnings of 4 cents per share.

In a conference call with analysts, Bill Roach, interim CEO of SonicWall, said the company experienced a slowdown in sales of its midtier PRO appliance product line.

"While our pipeline for opportunities continues to expand, the completion of transactions has been slower than expected," he said. "Based on discussions with channel partners, we believe these shortfalls in [the mid- and high-end of [the market are primarily due to a continued slowdown in IT spending."

But the company saw healthy demand and price stability for its SOHO and TELE3 products lines, Roach said.

He said he couldn't blame competitive pressures for the slowdown in the midtier line. "The feedback I'm getting is that it's not a competitive issue, but it's just a macro issue," he said.

"We're not losing deals, but the sales gestation time is longer than we anticipated," Roach said.

SonicWall is expected to announce its third-quarter results on Oct. 24.

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