Earnings Woes Don't Discriminate in Q3
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Judging by the lower-than-expected sales results many Internet firms have reported since September, it seems that the PC makers aren't the only firms seeing a depreciation in the New Economy.
Marimba Inc., Razorfsh Inc. and Snowball.com Inc. -- an infrastructure management firm, a digital solution provider and an online network for young adults, respectively -- all announced shortfalls in projected third-quarter earnings Thursday.
Marimba, who said failure to complete enough sales transactions in the quarter contributed to its lower earnings, said it expected to see third quarter revenues of between $10 million and $10.2 million and a diluted loss per share of 13 cents to 17 cents, excluding a charge of $585,000 for deferred stock compensation.
While the firm expects to close the sales next quarter, it wasn't enough to keep Bob Maynard, its vice president of worldwide sales, from quitting "to pursue other interests." President and Chief Executive Officer John Olsen has assumed the role of acting vice president of worldwide sales.
The digital solutions provider, lauded by companies seeking hip redesigns, said it believed that although it has achieved record revenues in the U.S., it has faced a greater-than-expected seasonal impact on its European operations combined with the strong U.S. dollar. The firm said it will reconfigure its business approach overseas.
Snowball.com Inc. revealed the worst of the three dips. The firm said revenue for its third quarter fiscal 2000 is now expected to be in the range of $5.0-$5.2 million, compared with $6.2 million for the second quarter 2000 and $1.2 million for third quarter 1999.
The firm said it should expect to report a decreasing pro forma loss between 36 and 38 cents per share, compared to 43 percents per share in the previous quarter. CEO Mark Jung blamed weakening advertising sales for the losses.
Worse still, the firm said it must can 50 people, or 15 percent of its workforce, to recoup operating losses.
Weaker sales, weaker sales in Europe, component shortages -- these are the crux of the excuses dot-coms have attributed to lower-than-expected earnings. Although every firm issues the standard line that it is "disappointed in the results, but is confident in its business model," investors are starting to take notice the day after the shortfalls are announced.
Perhaps no firm worse than Dell feels the wind from its stock dropping so fast -- at the close of trading Thursday, the stock was down $3, or 10 percent, to $25.19. Earlier in the day, the stock touched $25 -- its lowest price since October 1998.
PC firms Intel, Apple Computer Corp. and Dell Computer Corp., whose bread and butter is PC-making, announced let-downs in the past month, but Thursday's showings from Marimba, Razorfish and Snowball.com Inc. hint at what many analysts said would come eventually -- that the high-flying Internet boom may be in for a landing soon. How rough or soft remains to be seen.