Trojan shares plunge on second earnings warning
biz.yahoo.com
Wednesday September 29, 5:37 pm Eastern Time
OTTAWA, Sept 29 (Reuters) - Investors took a swipe at Trojan Technologies Inc. (Toronto:TUV.TO - news) on Wednesday, stripping nearly 37 percent from its stock's value after the water disinfectant firm announced a second profit warning in three months.
Shares in the London, Ontario-based firm dropped C$4.60 to close at C$7.30 on the Toronto Stock Exchange on volume of 181,049 shares. That's a new 52-week low and far from the 52-week high of C$21.50.
Trojan said on Wednesday it expected to break even in the fiscal year ended August 31. On June 29 it had predicted a profit of 60-65 Canadian cents a share, backing away from analysts' earlier consensus estimates of C$1.07 a share .
In making the break-even forecast, the company said a yearend audit revealed the cost of goods sold and overhead had been understated due to accounting problems.
In June, Trojan, which develops high-tech systems that use ultraviolet light applications to disinfect water, said increased product development and patent litigation costs had led to a lower profit forecast.
''The company has been fast growing, it's been moving into new markets that are also growing quickly, and they have been adding bodies,'' said Sara Elford, analyst at Canaccord Capital Corp. in Vancouver.
''It will happen to the best of companies that that can sideswipe you...It's a question of how quickly can they bounce back from this.''
Trojan, which projects a return to profitability in fiscal 2000, said it will outline its plan to restore profit when its results are released in 30 days.
''If I had to place a wager on a basis of what probability I think that they can do that, I'd say greater than 50 percent,'' said Elford, adding the firm now needs to earn back market confidence. ''Trust me. There can be no third time.''
($1=$1.46 Canadian)
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FWIW - I'd say the drop in SVSY's stock price was because of Trojan's news release.
Emory |
