MACR ($31) Macromedia shares dive 31 pct on weak sales outlook
(UPDATE: Adds closing share price)
LOS ANGELES, Jan 17 (Reuters) - Shares of Web design software maker Macromedia Inc. (NasdaqNM:MACR - news) fell to their lowest levels in 1-1/2 years on Wednesday, a day after it warned of anemic growth in its current quarter and announced a merger with software company Allaire Corp. (NasdaqNM:ALLR - news).
Although the company met third-quarter earnings estimates, it warned of a slowdown in fourth quarter revenue growth due to an uncertain economy.
Macromedia shares ended down 31 percent or $13-11/16 to $30-5/16, reaching their lowest levels since August 1999. The shares were the largest losers on the Nasdaq in percent terms, and have fallen from $120-7/8 in July.
The San Francisco-based company posted pro forma earnings of $16.2 million, or 29 cents a share, compared with the First Call consensus analyst estimate of 27 cents.
Banc of America Securities downgraded the stock to a buy rating from its previous strong buy recommendation, saying it should remain weak in the near-term after the company's revenue outlook. Analyst Greg Vogel also cited concerns over the Allaire merger.
``We believe that the stock will remain somewhat weaker near-term due to materially lower revenue guidance and uncertainty surrounding the Allaire acquisition,'' Vogel wrote in a report.
Macromedia said it would acquire Allaire, a Web application platform developer, for $360 million. Allaire shares gained 9/16, a 7 percent rise, to $8-1/2 on the Nasdaq.
While many analysts said the deal looked good in the long term, they expressed some concern over Allaire's profitability. The company reported a December quarter loss of $8.9 million, or 33 cents a share.
Robertson Stephens analyst Lowell Singer also downgraded Macromedia to a long-term attractive rating from a previous buy rating. Singer noted that the revenue outlook for Macromedia, even after the merger with Allaire, was still 8 percent lower than Macromedia's prior revenue estimates.
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