Shares closed at $36.63, a decline of $40.50, or 52.5 percent, on volume of almost 19 million shares.
Plano, Texas-based Entrust expects second-quarter earnings of 2 cents a share. Analysts polled by First Call projected the company to earn 8 cents a share. The company is slated to report second-quarter results at the close of market July 18.
The profit warning is related to a delay in closing sales of Public Key Infrastructure (PKI) systems and does not mean Entrust is losing business, the company said in a statement. Entrust makes software to secure online transactions using PKI technology. PKI systems issue and manage digital certificates, which serve as electronic IDs online.
The company competes in the growing market for Web security software against rivals VeriSign and GTE's CyberTrust. Entrust faces heightened competition from a growing number of players as more businesses conduct increasingly complicated transactions via the Web.
Today's earnings warning reverberated throughout the security software sector, sending most security stocks lower.
Check Point Software slipped $10.06, or 4.6 percent, to close at $210.56. VeriSign fell $16.88, or 9.2 percent, to $166.50. Axent Technologies dipped $1.88, or 7.7 percent, to $22.63. And ISS Group slid $2.94, or 2.9 percent, to $97.
Other software makers, including Computer Associates and BMC Software, saw their stock hammered today after issuing profit warnings.
Shares of Computer Associates dropped 42 percent after the company warned that first-quarter earnings will miss analysts' estimates. The company expects to earn 11 cents to 16 cents in its first quarter, which is far below Street estimates of 55 cents a share.
Meanwhile, BMC Software shares slid 40 percent after the business software maker said first-quarter earnings would fall short of analysts' expectations because of weakness in its mainframe business. BMC said it expects to report first-quarter earnings of 18 cents to 21 cents a share. Analysts polled by First Call projected the company at 46 cents per share for the quarter.
Entrust said revenues for the second quarter, which ended June 30, will be up "substantially" from the year-ago figure of $19.8 million and "slightly above" last quarter's revenues of $29.1 million.
"I remain optimistic about Entrust Technologies prospects for the remainder of 2000 and beyond," Entrust chief executive John Ryan said in a statement.