Zomox cut in half

Zomax Inc. (Nasdaq: ZOMX) was cut in half Friday on news its 2000 results would be lower than expected, the company is just the latest of many warning companies to blame softness on a weak European market.

Shares in the company, which is an outsource provider of process management services including customer support; DVD authoring; CD and DVD mastering; CD and DVD replication and supply chain and inventory management were down 8.21 to 9.09.

The company expects third quarter 2000 revenues of $57 to $59 million and diluted earnings of 15 to 17 cents per share. Revenues through the 9 months ending September 29, 2000 are expected to be $177 to $179 million, with earnings of 57 to 59 cents a share. Gross margins will continue at about 30 percent, with operating income margins of 15 percent. Full year revenues are expected to be $237 to $245 million, with earnings of 75 to 80 cents a share.

The shortfall is due to general market softness and in particular the European market, the company said. It also cited "a major customer modifying a third quarter program that the company was unable to replace with other business, an increase in polycarbonate prices due to increasing crude oil prices and further weakening of European currencies."

The company said recent completion of a 20 percent expansion of its manufacturing capacity should help it take on additional orders as the business accelerates into what is usually its strongest quarter. This extra capacity also helps minimize our outsourcing requirements.

Moving forward, the company believes it can achieve a growth rate of 15 to 20 percent annually.