Brightpoint (CELL)
Brightpoint's outlook is looking dim. After the bell Thursday,
the company reported a loss of two cents a share for the first
quarter, compared to a profit of 16 cents a year ago. The
distributor of cellular phones and services said revenue rose 9% from a year
ago to $372.7 million -- substantially lower growth than the Street expected.
Last month, the company warned that revenue would fall between $375
million and $400 million and earnings would be break-even, far below
forecasts. Subsequently, analysts cut the earnings forecast to zero. To
make matters worse, Brightpoint said it expects disappointing earnings for
the rest of the year.
Analysts did not foresee such a negative surprise. Rob Damron of Cleary
Gull Reiland & McDevitt said earlier Thursday that he thought Brightpoint
might report a profit of a penny or two a share. While Damron said analysts
were concerned with the company's future earnings potential, he predicted
sequential earnings growth in the future and a rebound by the fourth quarter.
The analyst said Brightpoint, which distributes Nokia and Ericsson phones,
has suffered from inadequate supply of phones in Asia. Given that the
demand for Nokia phones exceeded supply in the quarter, Brightpoint
missed out on revenue opportunity, the analyst explained. In addition,
economic turmoil and currency devaluation in Brazil have cut into profits.
Finally, Brightpoint is changing its distribution practices in Europe. It is now
fulfilling orders from wireless phone companies, instead of simply buying
phones in bulk and hoping to sell them later. While the transition will
ultimately generate more profit, Damron said it has hurt earnings this
quarter. RT
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