Third-Quarter Loss Sends Epicor Stock Reeling
Shares of Epicor Software Corp. tumbled 25% Friday, a day after the Irvine company posted an unexpected loss for the third quarter.
The management software manufacturer’s loss of $9.7 million, or 24 cents a share, “came as a nasty surprise,” said analyst Robert Kugel of First Albany Corp. He had estimated the company would earn a penny a share in the third quarter, still well off its earnings of 16 cents a share for the third quarter of 1998.
“They were already expected to break even because it’s a tough year for anyone selling manufacturing software,” he said.
The company disclosed its financial results late Thursday, after U.S. markets had closed.
On Friday, the stock fell $1.38 to $4.09 in trading of 1 million shares, nearly three times its average daily volume over the last three months on the Nasdaq market.
Manufacturers have curbed their software purchasing this year because of worries about the economy and concerns about disrupting production systems that are fine-tuned, or are being fine-tuned, to avoid Y2K problems, Kugel said.
He said he expects software orders from manufacturers to pick up in the second quarter of 2000, and the renewed demand will enable Epicor to return to profitability then.
The company acquired DataWorks Corp. in early 1999, but the two companies’ combined revenue has declined since they merged, Kugel said.
The analyst attributed Epicor’s earnings shortfall to operating expenses that “got out of control,” including salary increases and the use of cash reserves.
The analyst rates Epicor’s stock at neutral. He now estimates Epicor will post a loss of 29 cents a share in 1999 and earnings of 17 cents a share in 2000.
