Rainbow Curves Downward as 1st-Quarter Income Lags

Rainbow Technologies Inc. shares tumbled Thursday after the company, which makes security software, said it expects first-quarter net income to fall below analysts’ expectations.

The stock fell 28%, or $4.31 a share, to $11.13, making Rainbow the ninth-largest percentage loser in U.S. markets. Volume totaled 859,000 shares, more than nine times the daily average over the last three months. Earlier in the session, the shares fell to $10.63.

Irvine-based Rainbow, which makes programs to protect against software piracy, said it expects first-quarter earnings to drop below the 27 cents a share estimated by analysts polled by First Call Corp.

The company blamed the earnings and revenue shortfall on “economic conditions outside the U.S. and Western Europe.”

In the year-earlier period, Rainbow reported profit from operations of 38 cents a share. Including one-time charges, the company reported a loss of 40 cents a share. It had revenue of $25 million.