Please ensure Javascript is enabled for purposes of website accessibility

Why Sequans Communications Shares Got Destroyed Today

By Evan Niu, CFA - Oct 4, 2017 at 12:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The third quarter didn't go as well as expected.

What happened

Shares of Sequans Communications (SQNS 6.50%) have gotten crushed today, down by 35% as of 11:20 a.m. EDT, after the company revised its guidance for the third quarter that just closed. Sequans is now expecting significantly less in top-line revenue.

So what

Revenue in the third quarter is now expected within a narrow range of $11 million to $11.2 million, down from a prior forecast of $15 million to $17 million in sales. Gross margin should be over 43%, an improvement from the previous guidance of over 40%.

Visualization of a smartphone interacting with the Internet of Things

Image source: Getty Images.

On a non-IFRS basis, Sequans now expects a net loss of $0.06 to $0.07 per "share/ADS," slightly worse than the prior outlook of $0.05 to $0.07 per share in adjusted losses.

Now what

Sequans attributed the shortfall to "greater-than-expected weakness from emerging markets for broadband-related products, changes in customers' forecasts due to excess channel inventory for broadband products in the United States, and a delay in concluding the terms of a project related to a vertical market." The broadband business is expected to remain weak throughout the rest of the year, but the company hopes to return to growth in 2018, driven by the Internet of Things (IoT) market.

"We believe the long-term growth drivers of our business, particularly for IoT, remain in place despite these near-term headwinds," CEO Georges Karam said in a statement. Sequans reports full third-quarter results on Oct. 31.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sequans Communications S.A. Stock Quote
Sequans Communications S.A.
SQNS
$2.62 (6.50%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.