Cinram, a competitor of Nimbus warned of lower than expected first quarter earnings yesterday because of a lack of hit releases. Similar fears could explain the recent weak performance of Nimbus.
Cinram stock drops after results warning
Reuters Story - March 12, 1998 20:37
TORONTO, March 12 (Reuters) - Cinram International Inc
stock was off C$2.00 by midsession on Thursday to C$23.50,
following a warning that came with its 1997 results.
The drop came despite higher fourth quarter earnings, as
the company cautioned that first quarter 1998 earnings would be
lower than expected. Cinram, which makes compact discs, cited a
lack of hit releases as the reason for its sluggish sales.
In the fourth quarter, sales jumped to C$179.3 million from
C$107.6 million in the comparable 1996 quarter, while net
earnings rose to C$17.7 million from C$14.6 million in the
fourth quarter of 1996.
Last year's sales were C$513.3 million, up from C$340
million in 1996. The jump was largely due to American and
European acquisitions. Cinram is now devoting significant
resources to integrating the new companies.
The stock had nearly doubled in February from a year low of
C$15.75, but had been gradually tapering off in recent brisk
trade.
Cinram's stock had a second peak two weeks ago at C$26.70,
adjusted for a two-for-one stock split.
Meanwhile, sales for its DVD products -- CD-sized disks
capable of holding libraries of movies and multimedia -- have
not been high enough to affect the results significantly. The
company's announcement said that DVD will play a larger role in
three to five years. Some analysts think it is the reason to
stay with the stock.
"Long term, there is definitely a reason to invest. They've
been going through a wide range of acquisitons," said Marcel
Brichton, a Vancouver-based analyst with Global Securities
Corp. "I like this stock because of its capabilities in the DVD
area. They started out making 8-tracks, and survived through
many changes." |
