I've traded this stock many times over the last 2 years, but got caught with a little on this dip. Plenty of leaks over last 5 weeks show up as blocks trading at 9:30, quite a bit of sloppy (desperate?) selling. Some insider sales in Q4 also. This indicates to me that management saw this problem as early as Jan 15. Seems odd if this shortfall was as simple as delayed spending decisions.
Pure speculation follows:
Assuming Maintenence and service fees are fairly level, based on previous years sales, at 30-35 mil. New system sales could be dropping to as little as 30 mil., down from 49 last qtr. almost 40%.
Gross sales est. of 72 mil already reflected seasonal buying. A drop in revs. from 72 to 60 mil barely explains a profit swing of 15 mil. (est +.35 to -.25) after tax. I assume the pre tax profit swing is much larger, (as much as +15 mil to -11 mil.?)
First call est of .35 does seem fishy (lazy?) as it is almost same as Q4.
Q4 A/R's of 99 mil. (90+ DSO) will have to drop to 65 mil to remain at same 3+ months. Nice pile of cash if it happens without any writedowns. A writedown might explain this large profit swing.
Y2K? no idea here.
Competition?
Anecdotal, Tarrant has been spending personally on houses, islands, antiques etc. about as much as is possible in VT, where a million dollars still goes a long ways. The company has been very visible in local press with expansion plans, doubling workforce, etc.
Long term- I have added (loaded up) under 15, but will bail, as some fundamental problem may yet appear. It will take a while before this company earns a software type P/E multiple back.
Short term (day)- A small dead cat bounce occurred at the expected 10:00-10:30, but was minimized by trading problems as Nasdaq that caused day traders to sit it out. The afternoon was weak, as traders were playing the manic late day run in other stocks. The usual downgrades (penguins) bailed. Monday should be tradeable.
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