PairGain Beats Wall Street’s Predictions

Despite shrinking profit margins, financially troubled PairGain Technologies Inc. still managed to outperform Wall Street’s expectations when it released its fourth-quarter earnings Thursday.

For the final three months last year, the Tustin company reported a profit of $1.3 million, or 2 cents a share, a 64% drop from earnings of $3.6 million, or 5 cents a share, for the previous year’s last quarter.

The results still were better than Wall Street was expecting. Analysts had predicted that PairGain would lose 5 cents a share in the quarter, according to a poll by First Call/Thompson Financial.

The company’s fourth-quarter revenue fell 15% to $51.6 million from $60.7 million.

For the year, PairGain earned $2.4 million, or 3 cents a share, down 94% from net income of $39.5 million, or 53 cents a share. Annual revenue dropped to $224.9 million, from $283.1 million.

PairGain officials said revenue and gross profit margins were narrowed as competition drove down prices in the company’s core business, making products that allow telecommunications carriers to provide high-speed digital service over standard copper wires.

The company’s stock price rose 75 cents Thursday, closing at $13.50 a share.