PRGN ($15 - $9.16) shares tumble after earnings warning ets -7c vs +7c
NEW YORK, Jan 3 (Reuters) - Shares of software maker Peregrine Systems Inc. (NasdaqNM:PRGN - news) lost more than a third of their value on Thursday after the company warned of a quarterly loss, primarily due to poor results in Europe.
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The stock was down 38 percent, or $5.45, to $9.06 at midday and was the biggest loser in both net and percentage terms on the Nasdaq stock market. Earlier, the stock fell to $8.55, its lowest level since May 1999.
Late on Wednesday, San Diego, California-based Peregrine, whose software is designed to help companies manage their employees, assets and purchasing, sharply cut its fiscal third-quarter results forecast.
``There were really three primary areas of contribution to the shortfall in revenue: Europe, our managed-services provider customer segment, and the direct sales of our business relationship management products,'' Chief Executive Steve Gardner told analysts in a conference call Thursday morning. ``Europe was by far the biggest issue of the December quarter, accounting for over almost 75 percent of the shortfall.''
Peregrine said that for the third quarter, ended Dec. 31, it expects revenues of $175 million, down 20 percent from its forecast in October and from the consensus forecast of analysts polled by Thomson Financial/First Call.
Peregrine said it expects fourth-quarter revenues to be consistent with those of the third quarter. It gave no further guidance.
Peregrine forecast a third-quarter pro forma net loss of between 7 cents and 8 cents per share, excluding $75 million in acquisition and restructuring costs. Including those costs -- the most significant of which were from the acquisitions of Harbinger Corp., Extricity Inc. and Remedy Corp. -- Peregrine said its loss would be 32 cents to 33 cents per share.
Analysts had expected a profit of 7 cents to 11 cents a share before unusual items, with a mean estimate of 10 cents, according to First Call.
Although Europe's economic slowdown contributed to Peregrine's problems there, the company's sales staff also failed to efficiently execute sales after Peregrine's European general manager left during the third quarter, Gardner said.
The company has since made some management changes, but it will take time for the changes to bring results, he said.
Another problem was Peregrine's sales to management-services providers such as Electronic Data Systems Corp. (NYSE:EDS - news) and International Business Machines Corp.'s (NYSE:IBM - news) Global Services unit, he said. Such sales were hot during the first half of the year but tumbled in the third quarter as management-services providers cut back in anticipation of a continued weak economy.
Peregrine's business relationship management arm, which includes new agreements to resell some of its products or have them bundled in with others by IBM and BEA Systems Inc. (NasdaqNM:BEAS - news), did not debut as well as expected because of poor execution, Gardner said.
``We expect this area ... to be the most readily fixable,'' he said.
The third quarter loss comes on the back of a weak second quarter, when Peregrine lost $522 million, or $2.91 per share, including charges from its acquisition of Remedy. Excluding unusual items, it earned $8.4 million, or 5 cents per share.
As recently as Oct. 24, Peregrine told analysts it expected third-quarter earnings of 10 cents a share and fourth-quarter earnings of 11 cents a share.
Peregrine shares fell nearly 25 percent in 2001, while the S&P Software index gained less than 1 percent. |
