ECI Telecom shares plunged $2.25, or 14 percent, to $13.31 Tuesday after the company warned that its fourth-quarter loss will be even wider than it initially feared.
It will also restate its financial results for the first three quarters of 2000 mainly because the company still needs to comply with a new SEC accounting rule.
The Israeli firm told investors to expect sales for the fourth quarter of between $290 million and $300 million and $1.16 billion and $1.175 billion in the fiscal year.
In order to comply with the Securities and Exchange Commission’s SAB 101, a bulletin addressing how companies recognize revenue throughout a fiscal year, ECI Telecom (Nasdaq: ECIL) now says it must restate all of its quarterly results from this year.
ECI Telecom now says it will post an operating loss, excluding restructuring charges, of between $35 million and $40 million in the quarter.
On Tuesday, Oscar Gruss & Son downgraded the stock from a "speculative buy" to a "hold."
“ECI has not yet completed evaluating the impact of SAB 101 on its financial results. Based upon current information, application of the standard will result in a shift of some revenues from 1999 to 2000 and from 2000 to 2001," the company said in a press release. "Due to the initial implementation of SAB 101, the financial statements for Q1 through Q3 of 2000 will be restated.”
Back in December 1999, the SEC asked technology companies with a Dec. 31, 1999 fiscal year to comply with SAB 101 in their December 2000 quarter.
Earlier this quarter, ECI warned that it would post an operating loss of between $15 million and $25 million in the quarter and that it would pink-slip 400 employees.
The latest First Call Corp. consensus estimate predicts ECI Telecom will lose 2 cents a share when it reports its fourth-quarter results after the bell Feb. 14.
Last quarter, it met analysts’ estimates when it earned $16.6 million, or 18 cents a share, on sales of $327.2 million.
Of course, those figures will be restated later this year.
ECI shares moved up to a 52-week high of $39.88 in July before falling to a low of $12.13 earlier this month.
Four of the seven analysts following the stock maintain either a “buy” or “strong buy” recommendation.