Keystone Energy Services Inc.'s president and founder has withdrawn a profit estimate that doubled the company's stock price in two trading days, saying the forecast was too optimistic.
The California electricity seller had said in a Nov. 14 news release and on its Internet site that it would earn $12.3 million in 1998 on revenue of $177.6 million.
"I don't think [the forecast] was realistic," said President Richard Saxby. "I did not sign off on that press release in any way, shape or form."
The projections were made by former Chief Financial Officer L. Michael Caldwell, who was fired on Jan. 19, along with Keystone's Web site manager, Saxby said. Now Saxby says he's working on a revised business plan and won't estimate what the company's profit will be until that plan is finished.
The Los Angeles-based company, started 15 months ago by Saxby in an effort to cash in on California's deregulation of electric power, hasn't rung up its first dollar of revenue and is on its third chief financial officer. (Ex-CFO Caldwell was replaced by Len Viejo. The company said Viego was replaced on Feb. 22 by Ulli Butzke.)
At a high of $12.88 on Nov. 17, the company's 14.7 million shares had a market value of $189 million. Its market value is now less than $50 million. Keystone closed at $3.19 Friday in trading of 224,800 shares.
The last five months have been tough for the company. Several big contracts announced by Keystone have been canceled. Among them:
* A joint project with Honeywell Inc. to develop energy savings programs, announced Nov. 10, was disbanded in January, Saxby said. It produced no revenue.
* A $17.5-million, five-year electricity-supply contract with National Community Hospitals announced Dec. 5 was canceled Jan. 29. "We're renegotiating with their affiliates," Saxby said.
* A telemarketing contract with PowerSource Inc. of Mission Viejo to sign up power customers for Keystone, announced Dec. 12, has been canceled, said PowerSource spokesman Nick Maniatis.
Keystone still has contracts to provide electricity to 600 retail customers, valued at $6 million annually, Saxby said.
* COMING TUESDAY: On the day electricity deregulation begins, the Business section will feature a special report on what consumers need to know.