Avocent Shares Drop After Downgrade

The stock fell $1.02, or 6 percent, to close at $15.88.

RBC Capital Markets analyst Thomas Curlin moved his rating on the Huntsville, Ala., company to "Sector Perform" from "Outperform" and cut his price target to $17 from $22. The new target implies he expects the stock to rise less than 1 percent over Monday's $16.90 close.

Curlin said industry checks at the end of last quarter showed "signs of softening demand" and "volatile" revenue from original equipment. Server virtualization and KVM technology is likely contributing to the weakness, he said.

Virtualization software allows one computer to act like multiple machines, each with its own operating system and software. It helps companies spend less on equipment and energy in their data centers. KVM, or keyboard, video and mouse, technology allows a user to control multiple computers from a single workstation.

For the first quarter of fiscal 2008, Curlin said he now expects revenue of $127.3 million, down from $134 million. Analysts polled by Thomson Financial expect, on average, revenue of $134.15.