JetForm stock crashes on loss warning

greenspun.com : LUSENET : Y2K discussion group : One Thread

(UPDATE: Adds closing stock prices, analyst downgrade para 9/10)

By Susan Taylor

OTTAWA, Feb 8 (Reuters) - JetForm Corp. (Toronto:JFM.TO - news) (NasdaqNM:FORM - news) shares came in for a hard landing on Thursday after the company warned of a third-quarter loss amid slumping sales for its electronic forms in key markets, and analysts downgraded the stock.

Investors slashed more than 24 percent from the stock, which ended at C$4.15 on the Toronto Stock Exchange and $2-23/64 on Nasdaq. JetForm shares are approaching this year's low of C$3.60 and are down from a 12-month high of C$18.90 on the Toronto bourse.

Amid a 65 percent sales decline in its U.S. government and British markets, JetForm warned late on Wednesday of a third- quarter operating loss of C$3.2-$4.0 million, or 13-16 Canadian cents per share, on revenues of C$23.3 million and C$24.0 million. In December, it forecast third-quarter revenues between C$27 million and C$28 million.

The company also lowered fourth-quarter revenue estimates to C$29-$31 million and forecast earnings between a profit of 2 cents per share and a loss of 2 cents per share.

Yorkton Securities analyst Tom Liston downgraded the stock to accumulate from top pick and slashed the stock target to C$8 from C$18.

``The good news and the bad news is that it is focused in two areas,'' he said. ``In the U.K. they seem to have addressed those issues, I'm comfortable that they can get back on track by Q4. The U.S. government (market) was more of a concern, because that's usually a consistent performer.''

JetForm, which reports results on Feb. 28, said government sales tumbled from C$5.8 million in the second quarter, or C$1.3 million a year ago, to C$500,000 in the third quarter.

The company, which has reported a profit twice in its last eight quarters, suffered a sales slump in 1999 amid Year 2000 computer bug worries.

Groome Capital.com analyst Michel DeLavergne downgraded the stock to hold from buy and put his stock target under review.

``While the financial impact of the shortfall is not threatening to JetForm's financial heath, it comes at a time when the company appeared to be turning the corner after a very difficult 18 months through its Y2K transition,'' DeLavergne wrote. ``We believe the shares could test previous lows in the C$4 range.''

Canaccord Capital analyst Paul Bradley cut his recommendation to market perform from strong buy and reduced his stock target to C$15.50 from C$25.

``The company has not executed flawlessly and its bid to demonstrate a sustained turnaround has been put on hold,'' Bradley wrote in a research note.

``We believe that the stock will represent 'dead money' to investors over the next two or three quarters as they wait to be reassured that the turnaround will happen.''

($1 equals $1.51 Canadian)

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