Mercury Computer Systems sinks on Q3 outlook
Shares of Mercury Computer Systems, Inc. (Nasdaq: MRCY) fell 32%, or $4.24, to close at a new 52-week low of $8.84 on news the maker of computer systems and software forecasted a loss for the third quarter of fiscal 2008 despite second-quarter results that beat Wall Street’s projections.
The Chelmsford, Mass.-based company announced after the close on Wednesday that net income for the three months ended Dec. 31, 2007, was $0.8 million, or $0.04 per share, well above the net loss of $0.05 per share expected by three analysts polled by Thomson Financial. A year ago, Mercury Computer Systems had a net income of $0.2 million, or $0.01 per share.
Second-quarter revenues declined 9% to $52.6 million from $57.9 million a year earlier.
“I’m pleased with our second-quarter results, and with our sequential growth in revenue and backlog,” said president and CEO Mark Aslett in a statement. “Although we still have much work to do in improving the underlying operations of the business, we're continuing to see the benefits in the financial results of our restructuring efforts undertaken earlier in 2007.”
However, Mercury Computer Systems’ third-quarter outlook disappointed.
The company said that it expects to either break even or post a net loss of up to $0.04 per share. Meanwhile, Wall Street’s consensus estimate is for earnings of $0.10 per share.
“The primary reason is a reduced outlook at a subsidiary software company in the radiology business,” said Jeff Rosenberg, an analyst with Chicago-based investment firm William Blair & Co., in a phone interview.
Rosenberg said the subsidiary makes software used during medical scans.
Nevertheless, he expects Mercury Computer Systems to continue growing.
“They are looking for things to be better going forward, but not as good as originally expected,” Rosenberg said. “The slope will be different.”
William Blair & Co. has a rating of “market perform” on the stock and has received compensation for investment banking services from the company within the past 12 months, or expects to receive or intends to seek compensation in the next the months.
Mercury Computer Systems’ (MRCY) previous 52-week low of $10.13 was established on Sept. 28, 2007, while the 52-week high of $16.50 was reached on Dec. 26, 2007.
