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Ruckus expects second-quarter below estimates as China demand softens

By Chandni Doulatramani

(Reuters) - WiFi products maker Ruckus Wireless Inc forecast current-quarter revenue below analysts' estimates, citing a weak Chinese market and uncertainty over deployments by service providers in the Americas.

Shares of the company, which went public in November, fell 18 percent to $15.77 in after-hours trading. The company had debuted at $15.

The recent leadership change in China has some impact on state-owned businesses, a company executive said on a conference call with analysts.

"There is some pause in China because of the change in leadership," analyst Craig-Hallum Capital analyst Rajesh Ghai told Reuters.

China's parliament formally chose Xi Jinping as the country's new president in March, putting the final seal of approval on a generational transition of power.

Revenue from the Asia-Pacific region, including Japan, fell about 24 percent in the first quarter from a year earlier.

Analyst Ghai said the region contributed about 29 percent to Ruckus' revenue in the fourth quarter.

The company, whose products help mobile and broadband service providers manage traffic on their networks, expects second-quarter adjusted earnings of 3 cents to 4 cents per share on revenue of $61 million to $64 million.

Analysts were looking for adjusted earnings of 4 cents per share on revenue of $67.1 million, according to Thomson Reuters I/B/E/S.

FIRST-QUARTER MISS

A delay in deployments by telecom service providers also hurt the company's first-quarter results.

Ruckus has a large exposure to project-based telecoms because of which revenue can fluctuate in some quarters, analyst Ghai said.

"I don't think it's a reflection of the company's competitiveness. It's really a reflection of the fact that the demand environment continues to be choppy."

However, he said the delays were a temporary issue.

Sales were also hurt as the Chinese New Year fell in the middle of the first quarter, reducing the number of selling weeks.

Net income fell to $314,000, or break-even per share, in the first quarter, from $3.7 million, or 3 cents per share, a year earlier.

Excluding items, it earned 3 cents per share, below analysts' estimates of 4 cents per share.

Revenue rose 27 percent to $57.2 million, but fell short of the $63.3 million that analysts had expected.

The company competes with Meru Networks Inc, Aruba Networks Inc and larger companies such as Cisco Systems Inc and Ericsson.

Aruba shares fell 3 percent, while those of Meru Networks were down 1.5 percent in after-market trading.

Ruckus shares closed at $19.00 on the New York Stock Exchange on Monday. They have fallen 20 percent in the last three months.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila and Roshni Menon)

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