Shares of SafeNet were more than halved after it announced that first-quarter revenue and earnings will miss Wall Street's estimates by a long shot.
In a time when profit warnings have become the norm, SafeNet's (Nasdaq: SFNT) actually caught Wall Street by surprise. The Internet security firm was expected to hold up well amid an economic slowdown.
But SafeNet said it now expects net earnings ranging from 3 cents to 6 cents a share--or 2 cents to 4 cents after taxes. First Call's consensus of six analysts was expecting a profit of 22 cents a share. The company also said revenue for the first quarter will be about $6 million. Investors sent shares down $18.38, or 55 percent, to $15 Thursday.
SafeNet makes network security products that use encryption technology. Its virtual private networks protect business transactions and communication from hacker attacks. The company sells its technology to financial institutions, including 13 of the top 15 U.S. banks, government agencies and large corporations.
The company blamed the revenue shortfall on order cancellations and delayed orders from original equipment manufacturer (OEM) accounts in the networking industry.
SafeNet is "adjusting its business plans" to ensure a continued string of profitable quarters despite the tough economic environment, said CEO Anthony A. Caputo in a company statement.
The company will report actual first-quarter results April 17.