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Thursday March 11, 12:25 pm Eastern Time
Brightpoint falls on earnings warning
NEW YORK, March 11 (Reuters) - Shares of Brightpoint Inc. plummeted Thursday after
the communications services company warned that its first quarter and full year results may
fall short of expectations, due to problems in the Far East and Latin America.
Brightpoint's shares, the most active on the Nasdaq, fell $7.06 a share to $6, a 54 percent
drop from Wednesday's close.
The Indianapolis-based company said revenues for the first quarter will be between $375 million and $400 million, while net
income before an accounting change will be around zero.
Analysts had expected profits of $0.20 to $0.22 per share, and revenues of between $450 million and $475 million.
The company said beginning in late January it had experienced difficulties getting adequate product supply in the Asia-Pacific
region, specifically in China and Taiwan.
Brightpoint's Latin America division was also hurt by the devaluation of the Brazilian real on Jan. 13. Almost all of the
company's transactions in Brazil are real-denominated.
Lehman Brothers analyst Michael Ching, who cut his near-term rating on the shares to neutral from accumulate, linked the
shortfall to other factors, including lost business in Europe and lower than expected sales to Iridium LLC.
''We believe that the major culprit is actually a much more severe competitive environment,'' Ching, who also cut his long-term
rating to accumulate from buy, said in a brief.
''Some competitors have begun lowering prices and offering generous credit terms, which Brightpoint is unwilling to match.
This has resulted in some lost business that translates to lower revenues,'' he said.
The company said its North America division will generate revenue and operating income consistent with its expectations with
demand for its products and services strong.
But Warburg Dillon Read analyst Jeffrey Schlesinger questioned whether Brightpoint's domestic success can be duplicated
overseas.
''The U.S. market has shown that the value-added model works, but can it be replicated successfully in other markets?'' he
said in a note of the company, which distributes wireless telephones and accessory products. ''Pure distribution has little
leverage and can be upset by a number of local market factors.''
Schlesinger cut his rating on the shares to hold from strong buy.
BT Alex Brown also downgraded Brightpoint shares, lowering its rating to market perform from strong buy.
Shares of CellStar Corp. (Nasdaq:CLST - news), which also sells cellular phones and wireless telecommunications products,
also slipped, easing $1.75 to 10.94 a share.
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