From Briefing:
09:25 ET ******
BRIGHTPOINT, INC. (CELL) 13 1/16 CLOSED. Before the open Thursday, wireless telecommunications company Brightpoint (CELL) warned that first quarter profits would be substantially below current expectations. The company says that earnings per share will be "approximately zero." Wall Street had been expecting a per share profit of about $0.22, and CELL earned $0.17 per share in the year-ago quarter, so this is a major disappointment. The company says the problem is related to "difficulties in procuring adequate supply of product in the Asia-Pacific region." In this case, though, there will be no confusion as to whether this is a temporary problem related to short-term problems. The press release says in the very first sentence that "revenue and net income for the quarter ending March 31, 1999 and for the year ending December 31, 1999 will fall below expectations." That means that CELL has problems that go beyond a short-term procurement problem that occurred in the first quarter. Specifically, CELL is facing problems in overseas markets due to heavy competition and price pressures. In North America, CELL says that revenue and profits will be "consistent with the Company's expectations." Regardless, this is not good news for the stock, particularly as CELL is saying that problems could persist through the year. Investors don't mind problems so much as long as one can see past them to renewed growth. CELL did not specifically say that profits in the remaining quarters of the year will not be affected, but that is the way Briefing.com reads the press release. The overseas competitive problems will persist. CELL did not have that much profit growth to start with anyway. Over the past nine quarters, operating profits have ranged between $0.16 per share and $0.25 per share, and that largest figure was from the end of 1996. The stock hasn't done much either. It hit a 52-week high of 21 5/8 in April of last year and fell all the way to 5 in October before rebounding to 20 early this year. Now, it is indicated to open at about 6 1/2, slicing 50% off its market value. Ouch. And the market interpretation of the news is probably valid.
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