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Mercator Software tumbles after restating earnings

    Mercator Software shares plunged 2 7/8, or 17 percent, to 13 15/16 Tuesday after the company restated its first- and second-quarter results. Adding fuel to the fire, Prudential Securities cut the stock from an "accumulate" rating to a "hold."

    Mercator (Nasdaq: MCTR) shares collapsed in July after warning that its second-quarter sales and earnings would fall short of analysts' estimates.

    On Tuesday, the software developer said it posted pro forma earnings of $500,000 in its second quarter, roughly $700,000 less than it previously reported.

    Also, Mercator said it made $987,000 in its first quarter, well below the $1.8 million it previously reported.

    Company officials said it plans to hire an outside accounting firm to review its financial policies and procedures.

    Prudential Securities cut the stock from an "accumulate" rating to a "hold" and slashed its fiscal 2000 and 2001 earnings estimates.

    Dain Rauscher's Sarah Mattson cut its 12-month price target to $25 a share from $60 a share while maintaining a "buy-aggressive" recommendation.

    Recently appointed CFO Kevin McKay resigned in the wake of the financial confusion while Ira Gerard, the firm's vice president of finance, was fired.

    Mercator shares moved as high as 149 7/8 in March before sliding all the way to 13 7/16 earlier this month.