Equant Shares Plunge; New Focus IPO Soars

One star plummeted while another soared in the telecom stock sector on Thursday.

Shares of Equant NV (ticker symbol: ENT) plunged $14.50 to $46.88 on the NYSE, a 14-month low, after the global data communications network operator reported a larger-than-expected loss.

But fiber optics components maker New Focus (NUFO) led a good day for initial public offerings, selling 5 million shares that soared $31 to close at $51 on Nasdaq.

Equant stunned investors by reporting a first-quarter loss of $24.6 million, or 12 cents a share, up from $7.1 million a year earlier.

Equant’s network traffic rose 125% in the quarter, but costs increased 57%. Equant is spending more to expand capacity at the same time that competition allows customers to demand lower phone and Internet traffic charges.

“The core network services business faced strong pressure on margins which fell in the first quarter and should continue to fall in the second. They are promising a recovery in margins . . . but this remains to be confirmed,” said CCF Securities analyst Gilbert Soubie.

Meanwhile, the reception for Santa Clara-based New Focus suggested that investors still can get excited about telecom networking plays--or at least for parts makers. New Focus’ products include fiber amplifiers and other equipment that speeds data along networks.

“The hardware category specifically is one where growth is only going to continue as everyone gears up for crushing demand for data,” said Kenan Pollack, analyst at Hoover’s Online.

New Focus and several other IPOs Thursday were the first since May 5, as investors remain generally wary of new stocks. IBeam (IBEM), an Internet broadcast network provider, also went public, rising $4 to $14. But Nogatech (NGTC), a video chip firm, was a bomb, falling from its IPO price of $12 to close at $9.41.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hanging Up on Equant

Shares of Equant NV, a major data communications network operator, plunged Thursday in the wake of a disappointing earnings report. The stock had been a telecom sector star for much of the last year. Weekly closes and latest on the New York Stock Exchange:

Thursday: $46.88, down $14.50

Source: Bloomberg News