Intersolv Stock Tumbles On Concerns About Data Direct Business
NEW YORK -(Dow Jones)- Intersolv came in late Thursday with fiscal third-quarter earnings above expectations, but concern about results in its Data Direct business pulled the stock 18% lower Friday.
Intersolv (ISLI) earned 24 cents a share in the quarter, compared with 16 cents a year earlier, and a nickel above Wall Street's consensus estimate presented by First Call Corp. But analysts said Data Direct suffered from continued weakness in Japan, with revenue at the unit off 18% from the year-earlier period.
Shares of Intersolv around midday Friday were down $3.375 at $16.25 on Nasdaq volume of 1.9 million, compared with average daily turnover of about 295,000.
"Data Direct really had a dismal performance," said Damian Rinaldi, who follows Intersolv for First Albany Corp.
Paul Bloom, an analyst at Volpe Brown Whelan & Co., said in a research note that Data Direct's growth, even excluding Japan, was a disappointing 7% year-over-year. He said management attributed the weakness to a difficult database market environment. Data Direct makes data access products.
Bloom said the other parts of the company's core business - automated software quality and Year 2000 - performed well, and said the outlook for other geographic areas is encouraging. He said North America core business revenue rose 44%, with Euopean core sales up 29%.
Bloom maintained his buy rating on the stock, and Rinaldi said the shares are attractive.
"The momentum in the core business outside of Asia was strong enough that (Friday's stock activity) should be a buying opportunity," Rinaldi said. |
