Verity shares rattled after profit warning
Published: 09 Aug 2001 17:32 BST
Shares of infrastructure software company Verity tumbled on Thursday after the company said it will post a first-quarter loss because of the "pressures of a continuing weakened global economy."
Verity fell $3.05 to $9.65 in early trading, making it one of the Nasdaq's biggest percentage losers.
The company said first-quarter revenue is now expected to be in the range of $20m to $24m, compared with the $34m to $36m it previously projected. Based on those revised revenue estimates, Verity said it expects a loss of up to 12 cents per share in the first quarter, a reversal from previously projected earnings of 11 cents to 14 cents a share. According to First Call, Verity was expected to post a profit of 13 cents a share.
The news is the latest disappointment for the company, which provides software that indexes, searches and retrieves data for customers.
In June, Verity's fourth quarter met expectations, but the company announced that earnings for its first quarter would be well below First Call estimates at the time.
In a press release issued on Thursday, Gary J. Sbona, Verity's chairman and CEO, blamed "the pressures of a continuing weakened global economy." He added that the company is aiming to return to profitability by the third quarter of this fiscal year.
Banc of America Securities analyst Greg Vogel reduced his forecasts to match the company's revised projections but maintained his optimism on the stock's long-term prospects.
While Vogel said he sees "few prospects for a quick re-acceleration of licence revenue until the late fall when seasonal software spending increases," he maintained a "buy" rating on the stock. "The anticipated first-quarter shortfall is likely discounted sufficiently in the stock." Vogel wrote in a research note. He expects that the company can turn profitable again by November.
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