Powerwave Technologies Inc.’s recent troubles were outlined in more detail Tuesday after the Santa Ana-based company reported disappointing third-quarter earnings.
The company, which makes cellular base station gear for wireless networks, reported revenue of $77.1 million, down nearly 51% from a year earlier.
Powerwave posted a loss of $35.1 million, compared to an adjusted profit of $7.9 million a year ago.
Powerwave saw sales drop across its operations.
Revenue in the Americas was $32.5 million in the September quarter, down 54% from a year ago. Sales in the Asia Pacific region dropped nearly 57% to $14.6 million. Revenue fell in Europe, Africa and Middle East to $30 million, down 41.5% from a year ago.
Powerwave’s gross margin, a key measure for assessing technology companies, was 7.5% in the third quarter, down from 29.4% a year ago.
The company burned through $16 million in the first three quarters.
It had cash reserves of $46.6 million in the recently ended quarter.
Powerwave makes antennas, filters and other equipment for cell phone towers.
Its devices capture and boost radio signals between cell phones and base stations inside towers.
Antenna system sales topped $45.3 million, or 59% of the company’s revenue in the third quarter.
Investors have braced for the disappointing earnings report for weeks as problems began to mount.
Shares dipped below $1 on Oct. 19, a day after Powerwave made a drastic cut on its revenue expectations for the recently ended quarter.
Wall Street analysts on average had expected revenue between $162 million and $175 million.
The cash-strapped company has cited a “significant” slowdown in spending by North American network operators and the stalled merger between AT&T Inc. in Dallas and Bellevue, Wash.-based T-Mobile USA Inc., the U.S. wireless operation of Deutsche Telekom AG, for the revenue drop.
It also said it’s seeing less demand from its manufacturing customers, along with weakness in international markets.
On Friday Powerwave’s board and stockholders approved a 1-for-5 reverse split of its outstanding shares of common stock and a reduction of authorized shares of its common stock.
The split unsettled Wall Street, and investors sent shares down more than 19% at the close of trading.
The move was initiated to prop up Powerwave’s share price and stave off a possible delisting by Nasdaq, which requires companies to maintain a share price above $1.
Powerwave’s newly issued shares, which debuted Monday on the NASDAQ Global Select Market Monday, were down 13% at the close of trading Tuesday to a market value of about $99 million.
The company is finalizing a restructuring plan for long-term viability, according to Chief Executive Ronald Buschur.
As part of the plan, Powerwave said in a filing with the Securities & Exchange Commission last month it plans to sell its Santa Ana headquarters in one of the larger office deals of the year.
The company is expected to lease back the property from the new owners under a 15-year lease with two, ten-year extension options.