PeopleSupport falls following weak 2Q and 2008 forecasts

The Los Angeles-based company is getting less revenue from Vonage Holdings Corp. and Earthlink Inc. As a result, it expects to lose 65 cents to 74 cents this year, on $153 million to $157 million in revenue. The company also cut its outlook in February; in December it forecast a profit of 65 to 81 cents per share on $180 million to $190 million in revenue.

PeopleSupport's second-quarter forecast also fell short of analyst estimates; its first-quarter forecast missed expectations in March.

The stock lost 49 cents, or 5.1 percent, to $9.10.

RBC Capital Markets analyst Cynthia Houlton said order growth from older customers has been weaker than expected, and U.S. economic conditions are hurting PeopleSupport's ability to gain new clients.

Houlton added that the company is suffering from focusing on the U.S., because demand is stronger elsewhere and global service providers are performing well. She now expects PeopleSupport to lose 68 cents per share this year, down from a profit of 53 cents per share.

Friedman Billings Ramsey analyst Matthew McCormack said Earthlink and Vonage provided about one-sixth of PeopleSupport's revenue in 2007.