Simulation Sciences Stock Falls on Earnings News

Simulation Sciences Inc. stock tumbled Friday after the maker of industrial-simulation software reported a sharp drop in fourth-quarter earnings.

The company attributed the disappointing results to rising costs and delayed sales to a large customer.

Simulation Sciences stock fell 43.8% to $7.44 from $13.25. The shares had slumped to a low of $5.25 earlier in the session. Nearly 9.1 million shares changed hands in Nasdaq trading, more than 30 times the average daily volume.

The shares slid after the company said fourth-quarter profit fell to $109,000, or 1 cent a share, from $1.07 million, or 11 cents a share, a year earlier. Analysts had anticipated earnings of 18 cents a share. Revenue rose nearly 27% to $16.5 million from $13 million.

A delayed order valued at more than $2 million accounted for most of the earnings shortfall, Simulation Sciences said. The order didn’t materialize in the fourth quarter because the customer had a management change, the company said.

The company also encountered greater-than-expected costs of developing new software.

“We had a double hit,” said Simulation Sciences spokesman Bryce Betteridge. The company still expects to get the delayed order from the unnamed customer.

For the year, the company lost $11.1 million, or 98 cents a share, including $17.5 million in one-time charges related to research and development and other costs. The company earned $2.7 million, or 33 cents a share, in 1996. Revenue climbed 29% to $60.6 million from $46.9 million.

The company sells mostly to the petroleum, chemical and drug industries.