Citing weaker than expected orders, the company cut third-quarter revenue guidance from between $143 million and $155 million, to new guidance of between $124 million and $136 million.
ADVA Optical will also take nearly $11 million in non-recurring charges for fiscal 2017 tied to job cuts. While the number of job cuts have not been announced, ADVA Optical management expects to see nearly $18 million per year in savings due to the moves.
ADVA Optical is scheduled to report Q3 results in late October.
The forecast change comes on the heels of ADVA posting lower than expected Q2 numbers. The company reported an 8 percent year-over-year dip in quarterly revenues to $167.7 million, while net income plunged nearly 54 percent to $5.2 million in Q2.
The company also recently completed an acquisition of rival MRV Communications, in a move ADVA management said was needed to expand its business.
Simon Leopold, financial analyst at Raymond James, cited increased competition in the data center interconnect (DCI) space as likely behind ADVA’s woes. In a research note, Leopold mentioned that ADVA Optical recently lost an Amazon DCI contract to Ciena.“We believe the loss of a data center interconnect (DCI) project was a primary element behind the declines cited in its original forecast,” Leopold wrote.
ADVA Optical’s forecast adjustment followed disappointing results from larger rival Infinera. The company reported a 31 percent year-over-year drop in Q2 revenues. The decrease was on the back of its product lineup, as service revenues actually showed a slight uptick from last year.
Flat expenses, in turn, weighed on Infinera’s profits, which reversed from a return of $11.3 million last year, to a loss of $42.8 million this year.
Infinera management attempted to put a positive spin on the financial performance, with CEO Tom Fallon stating recent and planned product launches have the company “well positioned to grow market share and to gradually improve our financial performance.”
Infinera’s stock plunged nearly 18 percent on the initial Q2 news, and has since lost another eight percent in value.