Monday, provider of hardware-driven appliance solutions for software companies, Network Engines Inc. (NENG) revised its fourth quarter financial results from its previous announced guidance, reflecting the effects of difficult economic environment on IT spending decisions, resulting in lower revenues. The company was also notified by the Nasdaq with regard to non-compliance to minimum bid per share requirements, which has no immediate effect on the listing of its common stock.
The Canton, Massachusetts-based company expects net loss on a GAAP basis in the range of approximately $1.30 million to $1.70 million for the fourth quarter, compared with previous net loss guidance in the range of $600,000 to breakeven.
The revised estimates include approximately $450,000 of stock-based compensation expense, $485,000 of amortization of intangible assets related to the acquisition of Alliance Systems and $450,000 of restructuring charges.
The estimates exclude any charges that may result from the company's annual impairment review of goodwill and the potential assessment for impairment of intangible long-lived assets.
NEI expects fiscal fourth quarter 2008 net revenues in the range of approximately $39 million to $41 million, a decrease from the previously issued guidance in the range of $44 million to $48 million.
Gross profit margin for the fourth quarter is expected to be in the range of 13.5% to 14.5%, compared with the previously expected range of 14.5% to 15.5%.
The company lowered the upper limit of operating expense view and revised guidance in the range of approximately $7.0 million and $7.2 million from the previously issued range of $7.0 million and $7.5 million.
The Nasdaq Stock Market indicated that during the preceding 30 consecutive trading days, the closing bid price of NEI's common stock has been below the $1.00 minimum bid per share required for continued listing on the Nasdaq Global Market under Nasdaq Marketplace Rule 4450(a)(5).
The Nasdaq has provided the company with 180 day period, to regain compliance by maintaining a closing bid price of $1.00 per share or higher for a minimum of 10 consecutive trading days or more as per the discretion of Nasdaq.
The company can appeal to the Nasdaq Listing Qualifications Panel in case of receipt of such a letter or apply for a transfer of its common stock to Nasdaq Capital Market in case all criteria for initial listing is satisfied, other than the compliance with the minimum bid price requirement.
The company is currently considering alternatives to regain compliance with the continued listing requirements of the Nasdaq Global Market within the initial 180-day period.
Network Engines closed Monday's regular trading at $0.69, down $0.01 or 1.43%, on a volume of 72,887 shares on the Nasdaq.
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