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Foundry Haunted by 'Lumpiness'

For the second quarter in a row, Foundry Networks Inc. (Nasdaq: FDRY) has reported earnings short of analysts' estimates. But analysts, cheered by the company's consistent long-term growth, seem likely to continue rallying behind the stock.

Foundry may have gotten the amount of business analysts expected, but some large orders arrived at the very end of June, with shipment dates too late to be counted in its second quarter. As a result, Foundry missed the consensus estimate of $108 million in revenue.

Specifically: For the quarter ended June 30, Foundry reported profits of $15 million, or 11 cents per share, on revenues of $97.8 million, compared with profits of $16.8 million, or 14 cents per share, on revenues of $95.7 million for the same quarter a year ago (see Foundry Revenues Flatten in Q2).

In after-hours trading, Foundry stock hit $9.95, down roughly 14 percent.

In a conference call with analysts yesterday, CEO Bobby Johnson said the shortfall resulted from the "lumpiness" of Foundry's business. About 45 percent of the company's revenues come from service providers and U.S. government agencies, two groups that tend to place large orders at unpredictable time periods.

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