The information below is from the individual investor's web site.
JetForm Pre-Announces 2Q Shortfall: Lowering to Sell (11/12)
Individual Investor Online Analysis
JetForm Corp. (NASDAQ: FORMF) said today that due to a slowdown in its European business, the company will fall short of analysts' estimates in the second quarter of fiscal 1999.
JetForm expects to earn C$0.16 per share, (33% below our estimate), compared to C$0.11 per share in the second quarter last year. Revenue is expected to rise 19%, to C$31.7 million, over the same period in fiscal 1998.
We are very disappointed with JetForm's results. Based on conversations with management, we were under the impression that the business was still intact and the company would reach estimates.
We believe this announcement from JetForm may very well indicate a prolonged business decline that will last for the next couple of quarters. Besides a slow down in revenue, declining operating cash flow represents another concern. During the first quarter of fiscal 1999, JetForm's cash flow from operations dropped 82%, to $280,000, over last year. The principal negative factor was the increase in receivables, which in turn was the result of the larger number of orders booked toward the end of the quarter (at least that what management told us).
While JetForm had about C$77 million in cash at the end of July, the company's current liabilities, principally the current portion of the Delrina obligation, amounted to C$68 million.
Bottom Line:
Declining revenue and cash flow are all signs of trouble ahead. We are lowering our recommendation on JetForm to a Sell from Buy.
ps. I would expect some bounce tomorrow in the morning before the stock moves back down or settles into a trading rage around its current price. |
