03/19 13:59 New Era shrs tumble, company denies losing client
By Daniel Bases
NEW YORK, March 19 (Reuters) - New Era of Networks Inc.
[NEON-news], a maker of software used to shuttle data between
corporate databases, Friday denied market rumors it had lost a major
contract and client.
The rumors, plus concerns that a rival could turn up the competitive
heat, sent the stock tumbling $6.125 to $62 in Nasdaq trading on
Friday. Shares sank $5.25 on Thursday.
"There are rumors in the marketplace, which have no basis in fact,"
said Cynthia King, New Era director of investor relations.
King said the company has not lost a client or its related business,
but declined to elaborate on the rumors or identify the client involved
in the rumors.
Wall Street insiders said New Era was rumored to have lost
commercial banker, J.P. Morgan & Co. Inc.[JPM-news], as a client.
J.P. Morgan declined to comment.
"We went through this last September, when the shorts (positions)
come due," King said, adding "Our analysts are telling us that it is
likely the people with the short positions, and there is a large short
position out there."
Analysts remained positive on the stock despite other rumors that
the company was going to miss first-quarter earnings projections.
Because the company was in a so-called quiet period ahead of the
first quarter earnings report on April 21, King would only say that the
"guidance that we gave to analysts prior to our quiet period was that
their estimates were reasonable."
In February, New Era's chief financial officer told an industry
conference the company was confident it would beat expectations
that it would double revenues and earnings in 1999.
The 1999 consensus earnings estimate is 50 cents a share,
according to First Call Corp.
According Nasdaq, short positions of 1.52 million shares represent
about 9.4 percent of New Era's 24.7 million outstanding common
shares.
Analysts played down the acquisition of privately held Braid Group
Ltd. by New Era competitor TSI International Software Ltd.
[TSFW-news], citing it as excuse to cash in on record high prices.
"We're very positive on the stock, the business is terrific, the rumors
are unfounded. There's no impact from this competitor's acquisition,"
said CS First Boston analyst, Wendell Laidley.
"At these valuations, it doesn't take much to prompt someone to take
some profits, and my take is that perhaps the TSI acquisition gave
people such an excuse, even though we don't think it poses a
material threat," said David Breiner, an analyst with Volpe Brown
Whelan in San Francisco.
Breiner has a strong buy recommendation on the stock, and expects
1999 earnings of 48 cents a share on revenues of $123 million. The
price/earnings ratio is 133.
New Era was founded in 1993 by George "Rick" Adam, the former
head of information technology at Goldman Sachs & Co. |
