RealTime IT News

Ramp Recovers From Early Halloween Scare

Its stock took one of the biggest one-day hits in memory, as shares plunged 52 percent on Oct. 22 following a quarterly report that fell short of analysts' forecasts and a warning from company executives of delayed profits.

In the past three weeks, however, Internet access hardware vendor Ramp Networks (RAMP) has bounced almost all the way back from its October surprise. RAMP shares were trading early Thursday afternoon at 20 3/8. That's just 5 percent below the Oct. 21 closing price of 21 =, it's also a 126 percent increase over the 9 7/16 closing price of Oct. 28.

Certainly part of the reason that Ramp has recovered is that Internet stocks in general have performed well in recent weeks. A number of 'Net companies have seen their stocks register triple-digit price gains since mid-October.

Ramp Networks executives also deserve credit for handling the situation. Since the stock drop the company has issued a steady stream of press releases touting new products, an independent survey proving Ramp's dominance in the SOHO (small office/home office) market and an award from a PC trade publication.

Mostly, though, I think investors are correcting an over-reaction to Ramp's Q3 results and spending warning. The report showed that net loss increased to $3.6 million from $3.1 million in Q3 '98, though the recent loss includes a $1.2 million charge for legal and severance costs. Excluding that one-time cost, net loss in Q3 was 12 cents a share, which failed to meet the consensus analysts' estimate of a 10 cents per share loss.

Disappointing, no doubt, but hardly worth causing Oct. 22's selloff stampede, especially since revenue growth was strong. Ramp reported $5 million in sales for quarter ended Sept. 30, a 108 percent increase over the $2.4 million in last year's third quarter.

On the Monday after Ramp's fall, I wrote that its stock would recover "as investors regain their perspective." That appears to be happening now, though I don't expect a real vote of confidence (in the form of a run-up) for RAMP at least until the next quarterly report, which will give investors a better idea of the company's direction.

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