CacheFlow Drops on Lowered Expectations

CacheFlow, Inc. (Nasdaq: CFLO) was downUS$2.50 at $15.50 in morning trading Thursday after the company said revenueand operating results for the third quarter ended January 31st will be belowprevious expectations.

Revenue will likely total $20 million to $21 million, the Sunnyvale,California-based maker of Internet software said.

“While CacheFlow’s long-term outlook and market position are strong, recentmacroeconomic uncertainty and resulting customer delays in making capitalexpenditures have had a significant effect on revenue,” said president andchief executive officer Brian NeSmith.

“In addition, the market for our caching appliance is increasinglycompetitive and is evolving to a richer and more sophisticated contentmanagement and distribution solution,” NeSmith said. “This represents agreater opportunity for CacheFlow products in the longer term, but alsocauses a lengthening of purchasing cycles.”

CacheFlow said it is “taking actions to reduce its overall cost ofoperations” to boost results in the future.

“These measures includeaggressively managing headcount and bringing overall spending more in linewith expected revenue,” the company said.

“While a rapidly changing market and an uncertain macroeconomic environmenthave affected results, we remain confident in the long-term prospects of themarkets we target and believe that solid business disciplines, our globalpresence, our considerable technology resources, and a strong balance sheetwill allow us to respond to existing challenges in the marketplace,” NeSmithsaid.

The company plans to report results and issue an outlook for the rest of theyear on February 6th.

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