Shares of Sonus Networks (SONS) dropped 25% to $6.25, after the voice over Internet protocol equipment supplier said it found stock-options backdating in prior financial statements and would have to record charges for 2000 to 2005
The company also had fairly bad earnings news, although it cannot report GAAP results due to its ongoing options investigation. Based on its review to date, the Sonus expects to report year-over-year revenue growth for the first half of 2007 of 16% – 18%. The company’s performance for the first half of 2007 is principally a reflection of an expected shift in certain operators’ capital spending to the second half of the year. Sonus also expects to report an order-to-revenue ratio that is slightly below 1 for the second quarter, resulting primarily from a longer than expected approval cycle for a significant initial order from a new customer that is now expected in the second half of the year.
"While we achieved solid revenue growth during the 1st half of 2007, we are of course disappointed that we did not reach the even greater revenue growth opportunities we have been targeting due to the shift in capital spending patterns of certain operators," said Hassan Ahmed, Chairman and CEO, Sonus Networks.
Dark day for shareholders.
Douglas A. McIntyre