The value of small cap stock for EZchip Semiconductor Ltd. (NASDAQ:EZCH) fell its furthest in four years after the company reported its forecast for third-quarter revenues would come in below Wall Street estimates, Bloomberg reports.
The Israeli network processing company said it expects third-quarter sales to be between $8 million and $10 million, compared with the $17.9 million analysts were anticipating.
"It is a very disappointing short-term guidance that delays our expected revenue ramp," said EZchip CEO Eli Fruchter.
Fruchter added that the slowing global economy led to a major slump in telecommunications spending, with some of its largest customers, including Cisco Systems, reporting reduced capital spending.
"The third quarter guidance is causing share prices to decline," said Gary Mobley, an analyst at Benchmark Co. "The reason for the substantial disappointment is because it relies on three customers for 75 percent of its revenue."
EZchip's second-quarter adjusted earnings came in at 29 cents per share, which topped analysts' expectations of 26 cents per share.
As of 3:13 pm on Wednesday, August 8, EZchip shares were down 25.2 percent to $29.25.
