Rainbow Technologies Sees Loss Ahead

Rainbow Technologies Inc., an Irvine Internet security provider, said Thursday that it expects to lose money in the second quarter instead of breaking even, as business slowed in its U.S. and European markets.

The company said it now expects to lose 6 cents to 9 cents a share, with revenues down 5% from year-earlier levels.

Analysts had been expecting Rainbow to break even, according to a survey by First Call/Thomson Financial.

Rainbow said its gross margins are narrowing because of reserves taken for slow-moving inventory and price pressures in some markets.

The company also will incur $1 million in investment write-downs.

The financial outlook was disclosed after the close of U.S. markets. The stock closed at $6.05, down 45 cents a share, on Nasdaq. The shares have lost nearly 62% of their value this year.