Herschel is right...the market has overreacted, if all this is correct.
Beatriz seems to be a person of strong character and a person to be dealt with. She is staking her credibility here. I, for one, like that.
During the last big dump, ASPT met/exceeded revised earnings estimates each quarter that followed. I think Beatriz will have the troops fired up for the next year.
I'm going out on a limb and saying - it's time to buy ASPT again.
Aspect Communications Plunges on 2nd-Quarter Warning
San Jose, California, July 11 (Bloomberg) -- Aspect Communications Corp. shares lost more than half their value after the software maker said second-quarter profit fell short of estimates because it missed sales targets in the central U.S.
The shares plunged 24 to 19 7/8 in midafternoon trading, wiping out about $1.2 billion in market value. About 18.2 million shares changed hands, making it the ninth-most active U.S. stock. Just two weeks ago, Chief Executive Beatriz Infante said Aspect's earnings would meet analysts' estimates.
The company, whose programs help customers such as America Online Inc. and Deutsche Bank AG manage customer relations and calls, is the latest software maker to warn about a disappointing June quarter. Computer Associates International Inc. and BMC Software Inc. made similar announcements last week, sending their shares down 42 percent and 40 percent, respectively, on July 5.
``The expectations around Internet software companies who help companies do business on line are high,'' said Brian Brockway, analyst at Wit SoundView. ``Most of this was unforeseen, and we were really surprised.'' He cut his rating on Aspect to ``buy'' from ``strong buy.''
Aspect late yesterday said it earned 1 cent to 3 cents a share, excluding amortization costs, in the quarter ended June 30. Revenue totaled $137 million to $139 million. The San Jose, California-based company was expected to earn 8 cents, the average estimate of five analysts polled by First Call/Thomson Financial.
``I was very surprised at the revenue shortfall,'' Infante said. ``A large amount of business at a software company closes in the last few days of the quarter, and the revenue shortfall didn't become apparent until'' then.
Aspect will report second-quarter results July 19. It lost 18 cents, excluding amortization expenses and charges, in the year- ago quarter on revenue of $112 million.
Regional Problems
Aspect said it discovered ``widespread problems'' in the central U.S. sales region, which covers an area from Chicago to Dallas. Those problems will take ``one or two quarters to resolve,'' Infante said. She said the sales manager for that territory is no longer with the company.
``The central region offers the largest amount of sales opportunities,'' for Aspect, said Wit SoundView's Brockway. He said the region's sales manager ``miscommunicated'' to senior management that certain agreements were going to close that didn't.
Aspect also had expected to win several multimillion-dollar government contracts in the quarter. One of them has since been signed.
``It was just a matter of a few days stepping out of the quarter,'' Infante said, without identifying the agency involved. Aspect's government customers include the U.S. Treasury Department, Social Security Administration and Defense Department.
Overblown Reaction?
Some investors said the reaction to Aspect's profit warning was overblown.
``It's absolutely crazy that the market takes off 50 percent of its value because of this,'' said Gregg Hymowitz, of EnTrust Capital Inc., which owns more than 2 million Aspect shares and is ``absolutely not'' selling any of them.
Hymowitz said Aspect missed estimates this quarter because a sales manager ``completely screwed up,'' accounting for $10 million of the $15 million in lost revenue in the quarter.
``Had that region met the plan, the company would likely have met expectations,'' said Herb Tinger of First Albany Corp., who rates Aspect shares a ``buy.''
Aspect said it expects sales of $139 million to $143 million in the third quarter and $153 million to $163 million in the fourth. That's in line with forecasts from U.S. Bancorp Piper Jaffray analyst Ted Jackson, who maintained his ``buy'' rating on the shares. He expects the stock to reach $69 in the next year, down from a previous estimate of $77.
``Over the longer term, the market can forgive you for an isolated poor financial performance, but they won't forgive you for lying to them, said Jackson. ``(Infante's) clearly not doing that. She was blunt about what happened in the quarter.''
Challenges Ahead
Aspect's software gives companies the ability to look up account information, authenticate data and manage transactions on line. Companies who license Aspect's software can communicate with customers, suppliers and partners instantly over a common channel.
Aspect wants to merge traditional customer-service call centers with new Internet communication channels, such an interactive chat, e-mail and voice communications, Brockway said. The company is selling software that can analyze a customer's history and route a call to a specific service representative.
``The transition to an enterprise software business is going slower than it thought,'' Brockway said. |
