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Ixia Lifts Q4 Forecast Above Estimates - Update

Networking and telephony equipment makers Ixia (XXIA), Thursday said it has raised its revenue forecast for the fourth quarter above estimates, benefited by acquisition and various other cost saving measures. Cost saving also includes headcount reduction that would incur a charge of about $3 to $4 million, while bringing in savings of around $11 million, annually. About 80 positions will be eliminated by the end of June this year.

As per the new forecast, the Calabasas, California-based company now expects fourth quarter revenue to increase by around 32% year-over-year and approximately 16% sequentially to $54 million - $56 million. Previous revenue guidance was in the range of $50 million - $54 million.

On average, four analysts polled by Thomson Reuters currently expects revenues of $52.93 million for the quarter.

Results include a full quarter of contribution following the acquisition of Catapult Communications in June 2009 and two months of contribution following the acquisition of the N2X product line from Agilent, which closed on October 30, 2009.

Atul Bhatnagar, president and chief executive officer. "We are cautiously optimistic that we are starting to see a broader, positive trend in our market and are confident that we have the right products and larger addressable market opportunities."

Following the acquisition of N2X, the company also said it intends to perform various cost savings measures that include the elimination of duplicate resources originated as a result of the new product line acquisition.

In addition to these direct cost savings, the company also expects to realize scale efficiencies in its supply chain and administrative functions from the N2X acquisition and the acquisition of Catapult Communications.

The restructuring plan includes a reduction in staffing that commenced in the first quarter of 2010 and should be complete by June 30, 2010.

Tom Miller, chief financial officer said, "Over the last twelve months, we have announced cost saving programs that should reduce our operating expenses by $22 million on an annualized basis, while continuing to invest prudently in R&D."

XXIA is currently trading at $7.66, up $0.22 or 2.96%, on the Nasdaq.

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