Powerwave Stock Rises 32% on Earnings News
Powerwave Technologies Inc.’s stock rose 32% Wednesday after the company, which supplies power amplifiers used in wireless phone networks, posted higher-than-expected quarterly earnings on increased North American sales.
Powerwave rose $6.44 to $26.63 in trading of 5.46 million shares, more than 11 times its three-month daily average. Earlier, shares touched a 52-week high of $28.19.
Irvine-based Powerwave said that profit for the fourth quarter ended Jan. 3 was $700,000, or 4 cents a share, excluding a charge for research and development, beating the break-even average estimate of five analysts surveyed by First Call Corp. The company earned $5.3 million, or 29 cents a share, a year earlier. Revenue increased to $40 million from $37.8 million as sales to customers in North America rose.
“Revenue on the upside was a bit stronger than we expected,” said Brian Modoff, an analyst at BT Alex. Brown Inc. He said he was expecting revenue of $35 million to $36 million.
Powerwave said that $32.8 million of its quarterly sales were to North American customers such as Northern Telecom Ltd. and Lucent Technologies Inc., while sales to South Korea-based customers fell to about 18% of total revenue from 76% a year earlier.
After the charge, Powerwave had a loss of $7.2 million, or 42 cents a share, in the latest quarter. There were no charges in the year-earlier quarter.
Powerwave’s shares hit a record low last year after Asian economic turmoil resulted in canceled orders and falling demand in South Korea, which was the company’s largest market at the time. Since then, the company has expanded its non-Asian sales.
“Powerwave experienced strong demand outside of Asia. The U.S. is the strongest market for them,” said Modoff, who raised his rating on Powerwave to “strong buy” from “buy.”
Modoff estimates the company’s earnings at 95 cents a share next year on revenue of $219 million. He also raised his revenue estimate for this year to $174 million from $171 million.
“The key driver in 1999 is demand from new customers,” Modoff said. “Demand is strong in North America and Latin America.”
