Cogent Shares Plunge As Revenues Erode

It's been a week in which Wall Street has punished companies with negative surprises on their earnings or revenue guidance, including Internap (INAP) and Rackable (RACK). The latest casualty is Cogent Communications (CCOI) which lowered its revenue guidance for the remainder of 2008 when it released its earnings this morning. Shares of Cogent plunged 33 percent in the opening minutes of trading this morning, down $3.73 per share to $7.49.

Cogent made news in June when it slashed its already low prices for Internet bandwidth, hoping that lower pricing will accelerate the shift of video programming from cable TV to the Internet. Cogent said it expected the new pricing to help it gain market share from its rivals, primarily Level 3 (LVLT) and Global Crossing.

Cogent said it now expects a 2008 loss of 50 cents to 60 cents per share, instead of its previous estimate of a loss of 20 cent to 30 cents per share. The company also said it would generate revenue of "more than" $218 million, rather than a previous estimate of $225 million to $235 million. Analysts polled by Thomson Financial had been expecting revenue of $225 million.

Cogent is a large customer of Switch and Data (SDXC) leasing space in 29 of the company's 33 data centers.