Floating Point Systems’ Stock Tumbles After Report
The price of stock in Floating Point Systems dropped like a brick Tuesday as investors reacted to a disappointing earnings projection issued Monday. The stock fell $12.37 1/2 to close at $21.12 1/2; more than 1.3 million shares changed hands, making Floating Point the ninth most active issue on the Big Board.
In a statement issued after the market closed Monday, Floating Point said sales and profits would be lower than it anticipated for the third quarter ending July 31 and for the fiscal year.
Analysts said that without strong second-half sales, full-year profits would be about half what investors had been expecting. “It’s very simple. They missed their revenue and the earnings disappeared,” said David Wu, an analyst at S. G. Warburg, Rowe & Pitman, Akroyd in San Francisco.
Jeffry Canin, an analyst with Hambrecht & Quist in San Francisco, said that even though the softness in the domestic computer market is well known, investors were “fairly shocked” by the Floating Point announcement because as late as a month ago in a meeting with security analysts, company officials gave very upbeat projections of second-half sales.
In the statement, Lloyd D. Turner, president and chief executive of Floating Point, said third-quarter sales would be less than last year’s $32 million. But, because spending levels “were based on expectations of considerably greater revenue, it now appears net income for the quarter will range from a nominal profit up to half of the $3.6 million reported in the third quarter a year ago,” he said.
The company, based in Beaverton, Ore., is a leader in high-performance computer systems and makes array processors, scientific computers and its newly introduced T Series supercomputers.
Before the announcement, Wall Street analysts had estimated per-share earnings of $2 to $2.10 for 1986. Richard Edwards, an analyst at Robertson, Colman & Stephens in San Francisco, dropped his estimate to 97 cents from $2.01. Hambrecht & Quist went to a range of 95 cents to $1.20 from $2.
The company expects to announce third-quarter results Aug. 22.
