ITEM: Ciprico Avoids a Slip
amcity.com
Ciprico Inc. has defused a potential bomb.
The Plymouth-based disk array maker announced Jan. 5 that it would miss analysts' estimates for the second quarter in a row. Ciprico's stock took the near compulsory dip -- to $10.38 from $11.50 -- but recovered quickly and ended at $11.50 a day later.
"I've never seen a stock react so nicely to such a significant preannounced earnings shortfall," said Kinnard analyst Clint Morrison.
That reaction stems from a couple of factors. For starters, the shortfall wasn't entirely unexpected; Ciprico advised analysts that the mix of orders was different than expected.
Morrison even dropped his estimates several weeks ago.
Secondly, Ciprico expects lower earnings and revenue, but it also expects record orders, which means a nice backlog heading into the second quarter of this year.
Ciprico has always lived hand to mouth, so a backlog is a good thing, Morrison said. The backlog also clearly indicates that the problem Ciprico had in the fourth quarter of 1997, an order shortfall, has gone away. "Clearly the momentum has turned. The orders are back."
The third factor is a stock buy-back program announced in conjunction with the admission of an upcoming shortfall. For essentially the same reasons, Mark Bystrom, an analyst with Minneapolis-based R.J. Steichen & Co., raised Ciprico to a buy from an accumulate. Not bad for a company that announced bad news. "The reasons for missing the quarter this time are much better than they were last time," Bystrom said.
Despite those positive signs, Ciprico still isn't going to make as much money as expected. Morrison, for example, dropped his earnings estimate to 10 cents a share on $7.5 million in revenue. Ciprico has advised analysts that earnings could range from 8 cents to 13 cents a share on $7.2 million to $7.7 million in revenue. |
