Shares of network equipment maker Extreme Networks (NASDAQ: EXTR) are having a rough Wednesday. The stock opened 26.8% lower today, following last night's release of disappointing third-quarter results.
In the third quarter of fiscal year 2018, Extreme Networks saw sales rising 76% higher year over year to land at $262 million. On the bottom line, adjusted earnings jumped 60% higher and stopped at $0.16 per share. Analysts had been looking for earnings of $0.21 per share on revenues in the neighborhood of $268 million, so the company fell short of all the headline targets.
Extreme Networks's sales growth comes from several acquisitions that closed in 2017 . This quarter's negative surprises largely stem from the tricky process of integrating several large business operations into a cohesive whole. The company has focused on integrating the back-end systems of Extreme, Avaya, and Brocade into a single platform before turning their sights to more business-forward goals. As a result, the pipeline of incoming orders, contracts, and marketing efforts sputtered in the third quarter.
Management hopes to kick-start these stalled processes now that the back-end systems are all in place. But today, Extreme Networks' stock is trading roughly flat with its year-ago prices and 44% below its 52-week highs. Investors are looking for real-world progress here, not settling for promises of a better tomorrow.
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