Avici Systems stock plummets as firm shifts focus
Avici Systems Inc.’s (Nasdaq: AVCI) stock plunged in after-hours trading today after the routing systems provider announced plans to transition away from core router development to focus on its new product initiative, Soapstone Networks.
The North Billerica, Mass.-based company’s stock fell $3.67, or 27%, to $9.87 in unusually heavy volume late today. Shares have traded between $4.25 (one year ago today) and $13.90 (on April 12) in the past year.
By 6:30 ET, more than 1.8 million shares had changed hands compared with a three-month average volume of 585,125 shares.
In a written statement issued after the market closed, Avici said it expects the final shipment of its core router products will occur by the end of the year.
Avici CEO Bill Leighton said the routing market is under “tremendous pressure from alternative technologies such as Ethernet switching… .”
The company came to believe that its focus on core routers was not a sustainable growth business for the company, he added.
Its new product line, Soapstone, will exist outside the traditional router, according to Leighton, and could control an Ethernet, optical or routed network.
Also on Wednesday, Avici Systems announced a special dividend of $2 per share and released its first quarter financial results, which included a profit of $6 million, or $0.42 a share, on revenue of $20.5 million.
Two analysts polled by Thomson First Call were expecting earnings per share of $0.11 on revenue of $13.6 million.
