Echelon (ELON) Beats Estimates, Narrows Loss But Guidance Mixed

Echelon (ELON) has a long way to go to get to profitability, but it reported a decent quarter beating analyst estimates by a wide margin on the EPS side.  It reported a loss of .09/share which was .15 better than analyst expectations on revenues that were a bit better than analyst expectations at $27 million (analysts expected $25.5 million).  Those numbers are improvements both sequentially and quarter over quarter and that’s exactly what you want to see in a company working towards profitability (although it’s not expected to be profitable for a couple years). 

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Looking ahead, the company expects Q3 revenues in the range of $25 – $27 million, vs the analyst estimate of $30 million.  However, its EPS estimate is much better at a loss of .12 – .15 which is significantly better than the consensus of -.19. 

CEO Bob Maxfield commented:  “Our second quarter performance exceeded expectations as our LonWorks product line benefited from increased activity in the building controls market in the face of the expected seasonal declines in demand response. Our NES product line continued to be led by volume from our deployments to our Danish projects as well as the initial shipments to our new project in Finland. Enel revenue was strong because of spares requirements that were higher than expected.  Based on the activity we are seeing in the markets, we believe that we are on track to see modest revenue growth in 2010. This is comprised of anticipated growth in both our LonWorks and NES product lines which is more than adequate to offset the expected declines from the Enel requirements in Italy last year.”

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