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Sandvine posts loss as revenue falls short

File photo of Sandvine president and CEO David Caputo.

GEOFF ROBINS/The Globe and Mail

Network technology company Sandvine Corp. had a $4.2-million (U.S.) loss in its second quarter but the bad news was tempered by the announcement of new orders from a top U.S. telecom company.

The loss, reported in U.S. currency, amounted to 3 cents per share.

Based in Waterloo, Ont., Sandvine had $18.6-million in revenue for the three-month period. That was at the high end of a range of $18-million to $18.5-million estimate issued in a June 7 warning to investors.

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Prior to the warning, analysts had been expecting Sandvine to generate about $22-million of revenue for the second quarter.

Sandvine said last month that the revenue shortfall was due to delays in negotiating a contract with Spain's Telefonica.

It said Friday, shortly after the earnings announcement, that it has received more than $2-million in orders from one of the top 10 telecom providers in the United States, but it didn't identify the customer.

Telecom companies use Sandvine's technology to manage the traffic flow on their communications networks. The company had been on a growth curve as carriers adapt to their customers' increased demand for Internet-based communications.

However, signs of an economic slowdown in Europe and Asia and slow growth in North America have made many companies more cautious about spending on capital projects.

Sandvine's revenue for the three months ended May 31 was down 24 per cent from $24.5 per cent in the second quarter of 2011. The year-earlier profit was $1.7-million, or 1.2 cents per share.

"Our second quarter revenue was consistent with the estimate that we provided in June," Dave Caputo, Sandvine's president and CEO, said in a statement Friday.

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"We continue to believe that we will soon be able to win some initial business related to opportunities with Tier 1 operators, globally, and conclude a global supply arrangement for a major multinational operator customer."

In the contract announcement, Sandvine chief operating officer Tom Donelly said the U.S. telecom provider is "committed to delivering a consistently high quality user experience across the full range of their products and services.

The order included purchases of traffic management products for digital land-lines used by telecom companies to provide high-speed Internet services to their residential customers.

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