Ratings Cut, PairGain Stock Falls

PairGain Technologies Inc.’s stock price fell 12% Tuesday, one day after it reported price pressures and earnings that disappointed some analysts.

Two analysts lowered their investment ratings on PairGain because of price cuts for the company’s products, which speed up Internet service over standard copper wires.

PairGain stock fell $2.94 to $20.94 a share in Nasdaq trading. It was the sixth-most active stock on U.S. markets.

On Monday, after the market closed, PairGain said first-quarter net income was $12.2 million, or 16 cents a diluted share--up from 15 cents a share a year earlier. Analysts, though, had expected earnings of 17 cents a share, according to IBES International Inc.

Amar Senan, a Volpe Brown Whelan analyst in San Francisco, lowered his investment rating on PairGain to “neutral” from “buy,” citing lower prices on the company’s older Campus and HiGain products. But Senan and another analyst placed too much emphasis on price cuts, said Charles McBrayer, PairGain’s chief financial officer. He said PairGain itself has taken the lead in lowering prices by cutting costs and passing on savings.

Bloomberg News contributed to this report.