What happened

Shares of Aerohive Networks (NYSE:HIVE) were down 28.8% as of 3:15 p.m. EST Wednesday after the enterprise mobility solutions company announced disappointing preliminary fourth-quarter results.

On the one hand, Aerohive now expects quarterly revenue to be roughly $37 million, which is significantly below its previous guidance for a range of $40 million to $42 million. On the other hand, Aerohive expects to achieve positive operating margin and a "modest" adjusted (non-GAAP) operating profit -- near the high end of its previous guidance. 

Stock market prices in red and green on an LED display


So what

"Following the change in our sales leadership at the end of our third quarter, we uncovered underlying sales execution issues which became fully apparent in the last month of the fourth quarter," elaborated Aerohive CEO David Flynn. "We have taken actions to replace underperforming sales team members, and we believe that the new people we have been putting in place, combined with other actions, will enable us to capitalize on our improved product offering and exciting roadmap in 2018."

That's not to say it was all bad news in the fourth quarter. Aerohive highlighted a $1.7 million order from a Fortune 500 customer in Asia that should ship later this year. And in November, the company announced a new global OEM agreement with Dell EMC to deliver its full portfolio of Wi-Fi access points and the HiveManager NG Cloud Management Platform as a Dell EMC-branded solution. 

Now what

Nonetheless, while the fruits of those wins have yet to be fully realized, the market is rightly disappointed with Aerohive's sales execution challenges in the fourth quarter.

Investors should receive more clarity on Aerohive's "other actions" to address that challenge when it releases its final results on Feb. 8, 2018. In the meantime, it's no surprise to see shares falling so hard today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.