Xircom Expects Higher Than Predicted Losses

Xircom Inc., a Thousand Oaks computer network developer, says its loss from operations in its fiscal third quarter will be larger than predicted earlier, but that earnings should rebound toward the end of the year.

The company says lower-than-expected sales and product shipment delays will probably result in a wider loss than the 30 cents a share it previously estimated for the period.

Revenue for the three months ended June 30 will slip to $16.5 million, Xircom told Bloomberg Business News. Earlier, the firm said it expected revenue of $23 million to $26 million for the period.

The shortfall was a result of delays in shipping some new products and also high inventory levels at distributors and sellers, the company reported.

Xircom announced in May that it expected to suffer a loss from high inventory levels, but said this would be offset by the introduction of new products such as a third-generation modem and remote-access modem cards.

Now, however, the company says release of the new products was delayed three to four weeks because of compatibility problems with AT&T; Corp. chip sets that are used with the units.

One analyst, Rakeesh Sood of the Hambrecht & Quist securities firm, told Bloomberg he expects Xircom to overcome the compatibility difficulties.

“The delay shows the chip set was a little more complicated than anyone thought,” he said. “It’s a problem for the company, but they’re getting past it.”

Xircom said it expects earnings to make a comeback as it begins shipping the new modem products early in the fourth quarter.

Sood said the new products “should bear fruit.” He said he is maintaining his “hold” rating on Xircom’s stock.