RadiSys Corporation (NASDAQ:RSYS)

RadiSys Corporation (NASDAQ:RSYS) Implodes As Loss Spooks Investors

RadiSys Corporation (NASDAQ:RSYS)

Shares of RadiSys Corporation (NASDAQ:RSYS) fell to a new 52-week low after the global leader in Open telecom solutions reported disappointing third quarter financial results. The stock fell 32.03% in Wednesday’s trading session to end the day at $0.87 a share.

RadiSys Corporation (NASDAQ:RSYS)

Radisys Q3 Financial Results

Investors pushed the stock lower on the company reporting a net loss of (-$15.4) million or (-$0.39) a share, more than double a net loss of (-$7.6) million reported last year. Gross margin in the quarter shrunk to 10.8% compared to 29.4% in the third quarter of 2016.

Concerned with the spiraling net loss, RadiSys Corporation (NASDAQ:RSYS) has implemented a revised go-to-market strategy that will allow it to refine its cost structure. Plans are also underway to advance the current funnel of prospective and existing customer opportunities.

RadiSys Corporation (NASDAQ:RSYS) has generated revenues of $11.3 million up from $10.4 million reported last year. However, it was a decline from $11.4 million reported in the second quarter. The company attributes the decline to timing of professional services programs whose impact will be felt in the fourth quarter

“Importantly, we made tangible progress in the third quarter towards converting proof-of-concepts into commercial wins as evidenced by the two new Media Engine VoLTE wins as well as our first commercial award for deployment of our new Flow Engine appliance, the TDE-200,” said Brian Bronson, Radisys President, and Chief Executive Officer.

For the fourth quarter, the company expects revenues of between $29 million and $33 million, helped by certain MediaEngine orders. Radisys also expects a net loss of between (-$0.19) and (-$0.13) a share.

RadiSys-Mavenir Partnership

Separately, RadiSys Corporation (NASDAQ:RSYS) and Mavenir have joined forces to enable Communications services providers commercially deploy Mobile Central Office Re-architected as a Datacenter (M-CORD). The open reference solution is designed to provide capabilities for unlocking innovation across open networking ecosystem with cloud economies.

Under the partnership, RadiSys Corporation (NASDAQ:RSYS) is to integrate Maveni’r’s carried grade vEPC into its M-CORD Distribution. The integration should accelerate CSPs path to network integration.

“We’re pleased to partner with Mavenir to advance CSPs’ ability to break vendor lock-in, accelerate service innovation and lower CapEx and OpEx through commercial deployment of the M-CORD architecture,” said Neeraj Patel, vice president and general manager, MobilityEngine, Radisys.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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RadiSys Corporation (NASDAQ:RSYS) Stock Suffers

RadiSys Corporation (NASDAQ:RSYS)

Yesterday RadiSys Corporation (NASDAQ:RSYS) reported a loss of $7.6 million in its second quarter or (-$0.19) per share. Adjusted for amortization and restructuring the loss came in at (-$0.06) per share. Results beat the analyst’s consensus estimate for a (-$0.12) loss per share. Revenues came in line with analyst expectations but the stock price suffered on news that the revenues from the company’s largest customer will be excluded from guidance figures. Volumes are heavy and on pace to trade thirteen times their daily average. RSYS stock chart:

RadiSys Corporation (NASDAQ:RSYS)
Candlebar graph for RSYS stock prices over six months

Going forward, RadiSys Corporation (NASDAQ:RSYS) is expecting Q3 revenues between $26 – $30 million. Annual revenue is now expected between $130 million to $140 million. The revised revenue range is based on an uncertain future for revenues from RadiSys Corporation (NASDAQ:RSYS)’s

largest customer, and does not include any new DCEngine orders from this customer for the remainder of the year. Additionally, any material commercial revenue from the existing proof-of-concepts and trials ongoing across the Company’s strategic product lines would represent additional revenue not reflected in the revised guidance range. This uncertainty is weighing heavily on the firm’s stock price.

Brian Bronson, Radisys President and Chief Executive Officer stated in the company’s press release “Based on recent discussions with our largest customer, we are revising our full-year revenue expectations to exclude any new product orders from this customer as they now expect orders to resume in 2018.”

The news is another set-back for shareholders of RadiSys Corporation (NASDAQ:RSYS). RSYS stock price had underperformed badly. Shares are down over 45% YTD, and down over 48% for the year. Shareholders likely are experiencing frustration as EPS, while not showing a profit, has, in fact, been losing money at a smaller rate each year. Additionally there was an uptick in sales from 2015 when the company posted a figure of $184.6 million to $212.4 million for 2016. One bright spot is that the Relative Strength Index for RSYS stock is under 15 which indicates a stock in a heavily oversold position.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $RSYS and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.