Fortinet cuts full-year forecast; shares sink
(Reuters) - Network security products maker Fortinet Inc (FTNT.O) cut its full-year forecast, hurt by weak demand in southern Europe and slow growth in China, sending its shares down 18 percent.
Analysts had predicted that Fortinet, which makes firewalls, antivirus software and tools to speed up data across networks, would buck the otherwise weak spending on technology despite some weakness in Europe.
The company is too dependent on large deals in China, which may cause volatility in results, departing Chief Financial Officer Ken Goldman said on a conference call with analysts.
Goldman, Fortinet's popular CFO, is quitting to take up the CFO job at Yahoo Inc (YHOO.O).
He said on Tuesday that it would take at least two to three quarters to see an uptick in Fortinet's business in China.
The company gets about a quarter of its revenue from Asia Pacific and Japan, but does not break down its revenue from China.
Shares of the company, which closed at $24.80 on Tuesday on the Nasdaq, fell to $20.40 in trading after the bell. The company's stock has risen about 11 percent since it reported strong second-quarter sales in July.
Fortinet now expects full-year revenue of between $524 million and $528 million and an adjusted profit of about 51 cents per share.
It had earlier forecast sales of between $525 million and $530 million and an adjusted profit of between 51 cents and 53 cents per share for the period.
The company competes with Israel-based Check Point Software Technologies Ltd (CHKP.O) and the security divisions of Cisco (CSCO.O) and Juniper Networks Inc (JNPR.N).
Third-quarter net profit fell to $17.2 million, or 10 cents per share, from $17.9 million, or 11 cents per share, a year earlier, as operating costs jumped 23 percent.
Excluding items, the company earned 14 cents per share, in line with expectations, while total revenue rose 17 percent to $136.3 million.
Analysts had expected revenue of $136.4 million, according to Thomson Reuters I/B/E/S.
(Reporting by Sayantani Ghosh in Bangalore; Editing by Roshni Menon, Supriya Kurane)