October 23, 2007 / 1:30 AM / 11 years ago

UPDATE 2-Radvision cuts Q3 revenue outlook, shares fall

(Recasts, adds analyst comment, details from conference call)

By Bijoy Anandoth Koyitty

BANGALORE, Oct 1 (Reuters) - Israel-based video conferencing systems maker Radvision Ltd RVSN.O lowered its third-quarter revenue outlook due to weak sales at its networking business unit, sending its shares down to year-low levels.

Shares of the company were down more than 16 percent at $14.68 in afternoon trade, making them one of the top percentage losers on the Nasdaq. They had touched a year-low of $13.65 earlier in the session.

The outlook is on a lower revenue forecast for its networking business unit due to lower-than-expected sales both to the federal market and through its channels, the company said in a statement.

Manuel Recarey, an analyst with Kaufman Brothers, said the networking business unit contributes about 75 percent of Radvision’s revenue, and a significant portion of it comes from its Scopia line of video conferencing platform.

The company expects revenue of about $20.5 million for the quarter, down from its prior view of about $25 million. It had reported revenue of $23.6 million in the year-ago period.

In a conference call with analysts, the company said it lost some market share in the quarter as its competitor products provided the popular high definition continuous presence feature, which is absent in Scopia.

Radvision expects to introduce the feature at the end of October.

“We should begin to get contracts in the fourth quarter and make more substantial progress in 2008,” Chief Executive Boaz Raviv said in the call.

Recarey said by phone that the company would be in a position to win some of the lost market share back by the fourth quarter.

Cisco Systems Inc (CSCO.O), which accounts for 30 percent of the video conferencing software product line business, was unlikely to turn to a competitor as Radvision would have the high definition continuous presence feature by the end of the month, Recarey said.

During the call, CEO Raviv said lower sales to the federal market were due to the postponement and cancellation of some of the deals.

About 10 percent of its third-quarter revenue is expected to come from the federal business through independent channels, the company said.

For the third quarter, one analyst was expecting revenue of $27.7 million, according to Reuters Estimates.

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