Robert, I think this Bloomberg piece may help answer your question.
San Diego, March 11 (Bloomberg) -- Safeskin Corp., the largest U.S. manufacturer of disposable latex examination gloves, said its first-quarter earnings will be well below analyst expectations because of lower sales.
The San Diego-based company said it will have earnings of 1 cent to 2 cents in the quarter ending March 31. It was expected to earn 27 cents, the average estimate of six analysts surveyed by First Call Corp.
Safeskin said overproduction and pressure to lower prices hurt revenue and earnings. It said sales will be about $28 million below analyst expectations for the quarter and $53 million below for the full year. It said its gross margins will decline between 4 percent and 6 percent by the end of the year to between 46 percent and 48 percent. ''It's a challenging market because of the pricing pressures,'' said John Arege, an analyst at S&P Equity Group, who downgraded Safeskin to ''hold'' from ''buy.'' He expected revenue of about $66 million for the quarter.
Safeskin shares fell 2 3/4, or 15 percent, to 15 1/4 in trading of 6.6 million, six times the three-month daily average, before trading was halted in early afternoon.
The company was founded in 1987, when the U.S. Centers for Disease Control recommended that health-care workers wear gloves to protect themselves from HIV, the virus that causes AIDS. Safeskin, which does its manufacturing in Asia, controls about 20 percent of the U.S. market for gloves.
Safeskin had revenue of $237 million in 1998.
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