Redknee Solutions shares drop on surprise quarterly loss (Thomson Reuters)

Aug 12 (Reuters) - Shares of Redknee Solutions Inc fell as much as 23 percent on Thursday, a day after the Canadian telecom software company reported a surprise loss after two profitable quarters and said revenue would continue to be volatile.

Third-quarter revenue at the provider of billing software to wireless operators fell 27 percent, hurt by exchange-rate fluctuations.

"Slower Asia Pacific sales, a longer sales cycle, foreign-exchange changes and delayed revenue recognition issues created a revenue shortfall," Paradigm Capital analyst Barry Richards said in a note to clients.

On a conference call, the company said a significant portion of its deals had been delayed by a quarter or two as wireless operators reduced capital spending.

Richards, who has a "buy" rating on the stock, lowered his share-price target to C$2 from C$2.50.

Redknee reported a loss of C$0.2 million for the April-June quarter and said it completed the acquisition of privately held smaller rival Nimbus Systems.

Laurentian Bank Securities analyst Jim Powell said, "We now expect the acquisition to contribute revenue to the fourth-quarter results, though it may have a negative impact on earnings due to integration costs."

Shares of the Toronto-based company, which hit their life-time high of C$1.80 last week, were down 26 Canadian cents at C$1.40 in afternoon trade on the Toronto Stock Exchange. They hit a low of C$1.26 earlier in the session. (Reporting by Ashutosh Joshi in Bangalore; Editing by Vinu Pilakkott)