Avocent Corp. falls to 52-week low on weak Q4 revenue
Shares of Avocent Corp. (Nasdaq: AVCT) have dropped to a new 52-week low on news before the start of trading that the maker of software and IT technology announced preliminary fourth-quarter revenue that disappointed Wall Street.
The Huntsville, Ala.-based company reported that it expects fourth-quarter revenue to be between $155 million and $157 million, which is well below the $173.72 million projected by 11 analysts polled by Thomson Financial. During the fourth quarter of 2006 the company brought in $164.9 million.
Chairman and CEO John Cooper explained that Avocent was negatively affected by several deferred orders and lower IT investment activity among some U.S. customers, including those in the financial services industry.
“We believe some customers delayed projects as they are taking additional time to contemplate industry developments and to assess macroeconomic factors,” said Cooper in a statement. “These factors were not apparent in our international sales where we experienced solid growth in Europe and Asia.”
“This is probably industry-wide; Avocent is not the only one affected,” said Eric Kainer, an analyst with investment bank ThinkEquity Partners, in a phone interview. “Anyone who has broad exposure to the financial industry is being impacted.”
Avocent reported that it is working with U.S. distributors to reduce the level of inventories held by them at the end of the fourth quarter.
As for the company’s growing international business, Kainer does not see how that segment can offset weakness in the North American markets.
“It’s a lot to make up for,” said Kainer, who currently has a “buy” rating on Avocent’s stock. “I don’t see any way in which it could fully make up for it.”
Final results for the fourth quarter ended Dec. 31 will be released on Jan. 24.
At 1:11 p.m. ET shares of Avocent Corp. (AVCT) had retreated $3.68, or 18%, to $16.53. The previous 52-week low of $20.04 was established on Jan 4, while the 52-week high of $35.64 was reached on Feb 2, 2007.
