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Avanti Communications Group PLC Crashes 33%

The shares of Avanti Communications (LSE: AVN) crashed 82p, or 33%, to 165p during early trade this morning after the satellite operator admitted its revenues had fallen below expectations.

The AIM-traded company claimed sales during the year to 30 June had been affected by “timing movements of certain contracts” and would be £10m less than City estimates.

Prior to today, revenue forecasts for Avanti’s full year were £30m according to Digitallook.

Avanti blamed the shortfall on several major African contracts being deferred into the new financial year, alongside doubts arising on an earlier deal.

The firm did say, however, that sales progress was “otherwise encouraging“, with agreements signed with Vodafone and CNN. Some 40 contracts were signed between January and June, and customer numbers now total 96.

Avanti also confirmed its revenue backlog for the next three years was £42m, £46m and £40m.

David Williams, Avanti’s chief executive, said:

We designed our fleet with an emphasis on quality and flexibility. As a result, our products have competitive advantages which enable us to win good business with strong customers, albeit later than hoped.

John Brackenbury, Avanti’s chairman, added:

Whilst forecasting the precise timing of revenue trajectory in this emerging business has been difficult, I am confident that the outlook for filling our fleet is strong.

Following today’s share-price crash, Avanti’s market cap stands at £184m and remains supported by future rather than current profits.

Indeed, the company today confirmed it has only just become cash-flow positive while net debt stands at £167m.

Of course, whether those numbers and this morning’s share-price collapse combine to make Avanti a falling knife worth catching is something only you can decide.

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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended shares in Vodafone.