<<NEW YORK -(Dow Jones)- Oppenheimer & Co. analyst Steven Levy cut his fiscal 1997 earnings prediction on U.S. RoboticsCorp. to $3.45 a share from $3.50.
Levy, one of U.S. Robotics' strongest supporters, said he's maintaining his buy rating. "This (stock) is my No. 1 idea," he said.
Investors weren't quite as enthusiastic. The company's shares closed off $1.375, or 1.87%, at $72.25 after heavy trading Wednesday.
Levy did say he cut his estimate because he expects the Skokie, Ill., maker of modems and network access products to incur higher sales and marketing expenses this year. He increased his revenue estimate slightly to $3.03 billion from $3.01 billion.
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Some analysts have raised concerns about the quality of U.S. Robotics' first-quarter earnings, reported Tuesday.
Although earnings and revenues were in line with estimates, receivables rose sharply to $631 million at Dec. 29 from $490 million at the beginning of the quarter.
Such a strong increase can indicate that a company rushed to ship products late in the quarter - called "stuffing the channel" - to meet Wall Street's revenue and earnings expectations. When that happens, investors worry about coming quarters.
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Levy said he didn't change any numbers because of the receivables issue, and noted that the company's highest-volume modems had the same amount of inventory in the channel at the beginning of the quarter as at the beginning.
As culprits he fingered a shift toward more international customers, and more indirect distribution channels, both which come with generally longer payment terms.
"I am comfortable after examining the issue that there's no monsters under the cover," he said.
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Transmitted: 1/22/97 5:53 PM (L100QI1d) |
