A Plano tech firm saw rising numbers at the end of last year but couldn’t meet its own expectations as it was hampered by supply-chain challenges amid the rise of the Omicron variant.
Ribbon Communications, a provider of communications software and networking products, gave preliminary sales results for the fourth quarter – with revenue expected to be $231 million. While that’s up from the third period, that won’t reach the lower end of guidance, which was $240 million to $260 million. Margins were lighter than expected as well.
A challenge: supply chain and logistics issues “increased significantly” in the final weeks of the quarter, it said. That hampered its ability to deliver products and reduced sales by around $10 million.
It’s a fresh example of how concerns around the supply chain are weighing on companies as the economy deals with COVID-19. The Omicron variant has surged in the past several weeks, keeping folks away from their jobs as supply-chain issues get attention.
The World Bank said earlier this month that the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt and income inequality. Global growth is expected to decelerate from 5.5% in 2021 to 4.1% in 2022.
There are others in Dallas-Fort Worth facing similar issues. This week, Brinker, whose lineup includes Chili’s Grill & Bar, got hit with a downgrade by Wedbush, according to a research note.
A key concern: pricing power amid staffing concerns that have been “exacerbated by Omicron,” the note said.
Investors didn’t like what they saw with Ribbon Communications (Nasdaq: RBBN). Shares fell more than 15% on Friday, according to data at the Nasdaq.
"While we are disappointed by the results this quarter and the impact from the challenging supply environment, we remain excited by the continued progress we are making on our strategy to position our IP Optical Networks solutions with key Ribbon customers," said Bruce McClelland, CEO said in the statement.
The company noted that higher component costs, expedite and production fees — and logistics expenses affected margins. It also said that all figures in the release are approximate due to the preliminary nature of the announcement.
