Shawshank, VA 7/12/12 (StreetBeat) -- Shares of Calix Inc (NYSE:CALX) plunged 22 percent in premarket trading after the telecom equipment maker lowered its second-quarter profit outlook due to a cut in customer spending.
At least four brokerages reduced their price targets on the company's stock.
Network gear makers have been facing slowing demand for their products as telecom carrier customers cut spending amid a sluggish U.S. economy and weakness in Europe.
The slow spending is hurting vendors such as Calix, Adtran Inc (Nasdaq:ADTN) and Acme Packet (Nasdaq:APKT) just as they were recovering from the 2008 recession and intense price wars.
Adtran said on Wednesday it expected weak third-quarter sales as customer sentiment had deteriorated, sending its shares to a two-year low.
Raymond James analyst Simon Leopold, who had expected Calix to be better insulated from the slowdown than Adtran, cut his price target on Calix's shares to $8.50 from $10.
"(We) expect its shares to face material pressure following its negative pre-announcement," Leopold wrote in client note.
Calix shares, which have lost almost three quarters of their value since their year-high of $22.47 last July, fell to $5.05 in trading before the bell on Thursday. They closed at $6.48 on Wednesday on the New York Stock Exchange.
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