Further color from CBS Marketwatch:
>>NEW YORK (CBS.MW) -- Shares of Luminex dropped more than 36 percent Tuesday after unpredictable sales cycles and a decision to eliminate end-of-quarter discounting resulted in a shortfall in the company's first-quarter results.
The stock (LMNX: news, chart, profile) plunged $4.19, or 36.5 percent, to a 52-week low of $7.25, in afternoon action. Volume reached 1.21 million shares, more than six times its average daily churn of 198,100.
After Monday's closing bell, the Austin, Texas, provider of biological testing technology products for the life sciences industry forecast a loss of 20 to 23 cents a share on revenue of between $2.2 million and $2.7 million in the first quarter. Analysts polled by Thomson Financial/First Call were looking for a loss of 17 cents a share on revenue of $4.55 million in the period, on average.
Luminex laid the blame for the disappointing results upon continued delays in the commercialization timetables of its strategic partners. It also cited the change in its pricing strategy as a contributing factor. There are no plans, however, to back down from the move.
"Similar to a number of companies in hardware- and software-based industries, significant sales of the company's products have occurred in the last two weeks of the quarter," said Mark Chandler, the company's chairman and CEO, in the press release. "We feel strongly that this change in pricing strategy is vital to the long-term success of the company."
Looking ahead, the company expects revenue for the full year to miss its previous projection of $35 million to $40 million but it was unable to be more specific about the outlook. Wall Street is currently looking for a loss of 53 cents a share on revenue of $32 million.
"We remain extremely optimistic about the market acceptance of the Luminex platform," Chandler continued. "Our limited operating history and reliance on strategic partners to market our products, however, makes forecasting quarter to quarter, as well as annual revenue and operating results, extremely difficult."
The company is sticking to its price strategy in hopes that it will improve gross margins, and spread sales more evenly through the quarter, making it easier to model financial results and establish a predictable revenue stream.
News of the shortfall was met with downgrades from Stephens Inc. and Pacific Growth Equities. Both firms went to "neutral" on the stock, from "market perform" and "buy," respectively.
Pacific Growth analyst Al Kildani, who called the shortfall "significant," said that the pricing change was news to Wall Street. He found the disarray at the company, which also doesn't have a full-time chief financial officer, disconcerting.
"The size of the Q1:02 shortfall combined with recent changes in pricing policy and the absence of a full time CFO will heighten concerns about the quality of Luminex's financial controls," Kildani said in a research note to clients.
A word of caution to would-be buyers on the dip: Kildani added that Wall Street is likely to take a "wait-and-see" approach to Luminex in light of its recent track record, and that the stock now trades at a premium to the what he has pegged as the average revenue multiple of its peer group -- seven to eight times projected fiscal 2002 figures.
"We believe the valuation dynamic and general lack of information will keep the stock under pressure until we gain further clarity on the outlook," he said.
Further information isn't expected to be available until the first-quarter conference call later this month.
Michael Baron is a reporter for CBS.MarketWatch.com based in New York.<<
Cheers, Tuck |
