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AGT drops on earnings warning

Applied Graphics Technologies plunges after it says it expects to report third-quarter earnings that miss Wall Street's expectations.

Shares of Applied Graphics Technologies plunged as much as 57 percent in afternoon trading after the company today announced that it expects to report third-quarter earnings that fall well below Wall Street expectations.

The provider of digital asset management services said it expects to post third-quarter revenues of about $120 million, and earnings between 14 cents and 16 cents per diluted share, compared to 25 cents for the year-ago quarter. First Call's consensus of analysts expected the company to earn 43 cents per share.

Shares of Applied Graphics were down 44.7 percent or 6.59 points to 8.16. The stock has traded as high as 61.75 and as low as 8.44 during the past 52 weeks.

For fiscal 1999, AGT said it estimates revenues of between $500 million and $525 million and diluted earnings per share to be between $1.10 and $1.15, which the company said are significantly lower than had been estimated by analysts.

"AGT has grown from $31 million in revenues in the first full quarter after it went public in 1996 to approximately $120 million for the third quarter of 1998," said AGT's chairman and chief executive Fred Drasner in a statement. "It has become clear, however, that we will not achieve in the near future the same high rate of growth we have experienced during the past two years and that we are experiencing growing pains in certain areas of our business."

Drasner blamed the slowed growth on operational issues, as well as fewer new contracts and acquisitions.

Drasner, however, added that he is confident in AGT's business model.

"AGT remains a growing and profitable company and the leader in its industry," he said. "Our ability to generate cash?and the substantial availability under our bank lines, should give us the necessary resources to execute our business strategy."

The company was moving to realign management, he said.

AGT provides outsourced advanced digital media asset management and archiving services to magazine and newspaper publishers, advertisers and their agencies, entertainment companies, catalogers and retailers, as well as major corporations.