Rather than give you a summary of what I heard on the conference call, may I submit this....
NEW YORK, March 11 (Reuter) - Genrad Inc chief executive James Lyons
said Tuesday orders remain "very strong" and company fundamentals are
"solid."
Attempting to calm investor concerns after a precipitous drop in the
company's stock price Monday, Lyons said "There has been no decline in
orders. The fundamentals are still there. The company is solid."
In a contentious teleconference with analysts and investors, Lyons
called Monday's stock activity "illogical."
GenRad lost 5-1/2 to 12-3/4 in heavy volume on Monday. The stock
recovered on Tuesday to 15-3/8, up 2-5/8.
Lyons called Monday's stock activity "spontaneous combustion."
"I think there was a misinterpretation of information," he said.
Lyons reiterated that GenRad is committed to 25 percent growth in
earnings per share for 1997. GenRad has said it is comfortable with
earnings forecasts of about $1.25 a share for the year, in addition to
deferred tax benefits.
"Nothing has occurred ... to change the confidence in achieving that
metric," Lyons said.
While GenRad remains on track for the full year 1997, analysts said they were disappointed in the company's first quarter prospects.
Mark Kelleher, an analyst with Fechtor, Detwiler, said he trimmed his
first quarter estimate to $0.21 a share, compared with Wall Street's
consensus estimate of $0.27 a share.
GenRad, which manufactures hardware and software to help firms maximize productivity, said it faced higher first quarter expenses due to new product introductions and increased spending for new orders.
GenRad's stock slid Monday as news of the higher first quarter expenses began to trickle into the market, analysts said.
After the market closed Monday, GenRad issued a press release saying it guided analysts to first quarter earnings estimates of between $0.20 and $0.25, excluding one-time charges, on revenues of about $48-$50 million. Lyons said Tuesday that GenRad may exceed the first quarter revenue target.
GenRad also said Tuesday it will not post any charges in the first
quarter "that are not part of normal operations. Nothing is being
charged in the first quarter that I would call extraordinary," Lyons
said.
Lyons tried to calm investor concerns about the first quarter, saying
results will be consistent with the company's internal operating plan
and its goal of posting 25 percent earnings per share growth in 1997.
Lyons said the company had "no problem" during the first quarter, but
saw "good" revenues and orders. Lyons also denied some media reports
that first quarter orders declined.
Lyons also said he expects operating margins to increase. He did not
provide additional details. GenRad also continues to gain marketshare as industry fundamentals strengthen, Lyons said.
In an often heated teleconference, analysts and investors slammed GenRad for poor communication with investors. Some analysts accused the company of not simultaneously disseminating first quarter earnings information.
"There seems to have been ... selective dissemination of what the market has interpreted as a material change in what is going on with the company. Some people found out about this and the rest of us were kind of left left hanging," Andy Pratt, of Montgomery Asset Management, said during the conference call.
GenRad said it attempted to return more than a hundred calls on Monday. The company said trading was not halted in its stock due to instructions from the New York Stock Exchange.
Other investors and analysts suggested GenRad should have acted sooner
to alert Wall Street of higher first quarter costs.
"Expectation levels on the street were different than your (press
release). The company was aware of what was out there. You did not
nothing to correct it," Jack Harris of Benchamark Capital, said during
the conference call.
GenRad said it will work to improve its communication with Wall Street
in the future.
------------------------end of forwarded message ----------------
Can you blame them? Genrad has hardly been the communicative type.
RS |
