PairGain Shares Slide 14% After Report
TUSTIN — PairGain Technologies Inc.’s shares fell 14% Thursday after the company said its operating profit margin will shrink because of lower product prices and higher development costs.
The second-quarter profit margin will slide toward 20% from 26% in the previous quarter, according to Charles Strauch, chief executive of the telecommunications equipment maker. He made the comments in a presentation at the Hambrecht & Quist Technology Conference in San Francisco.
PairGain shares fell $3.625 to $22.375 as 8.78 million shares changed hands, four times more than the three-month daily average. Pricing has been an issue for PairGain after rivals Adtran Inc. and ADC Telecommunications Inc. won contracts from Pacific Telesis Group, a PairGain customer, earlier this year, said Tripp Rudisill, an analyst at Raymond James. “There’s a lot of pressure†in the industry, he said.
Rudisill said PairGain has been able to deal with these issues in the past by cutting costs or releasing newer products. “This is nothing new,†he said.
Since hitting a high of $42.50 on Jan. 24, PairGain shares have fallen almost 50%.
