Former local tech darling Rakon has cut its annual earnings guidance for the second time since December, blaming increasing price competition in the smart device market.
The Auckland-based company expects earnings before interest, tax, depreciation and amortisation between $5 million and $7 million in the 12 months ended March 31, it said in a statement. That's down from December's forecast of between $8 million and $12 million, when Rakon cut its expectations from $14 million and $16 million. The new forecast brings the company in line with analysts surveyed by Reuters, who are picking ebitda of $6.3 million.
"The downward adjustment comes as a result of the smart wireless device market's sudden and aggressive price reductions demanded of all key component suppliers," Rakon said. "The directors of Rakon are very disappointed to have to accept this downward reforecast."
Rakon blamed the December downgrade on "a delayed sales programme in the high reliability and smart wireless device segments of its business, plus a forecast decline in margin from some consumer products."
The shares gained 2.7 per cent to 38 cents in trading yesterday, and have shed 32 per cent in the past year. The stock is rated an average 'hold' based on four analyst recommendations compiled by Reuters, with a median target price of 40 cents. Rakon shares reached $5.80 a May 2007, a year after its listing.
