Inso shares plummet after warning, downgrade
Investors unloaded Inso Corp. (Nasdaq: INSO) as shares lost more than half their value Wednesday after the software developer warned that its fourth-quarter sales would fall short of analysts' estimates. The company is also looking for potential buyers.
Its shares plunged 19 3/4, or 56 percent, to 15 1/2 Wednesday.
On Tuesday, Inso said it expects to record sales of $11 million to $12 million in the quarter, well below the $14 million to $15 million range most analysts were predicting.
It also said it had retained Morgan Stanley Dean Witter to explore strategic alternatives, including the potential sale of the company.
"We are clearly disappointed in the preliminary revenues from our fiscal fourth quarter," said CFO Stephen Jaeger in a prepared release. "We have determined that these preliminary revenues reflect primarily sales execution and sales force staffing issues."
Inso said sales from its electronic business technologies division are expected to be about $4 million to $4.5 million, while sales from the its information exchange division are expected to be in the range of $7 million to $7.5 million.
First Call consensus expected Inso to lose 11 cents a share in the fourth quarter.
On Wednesday, Banc of America Securities analyst Greg Vogel cut the stock from a "buy" recommendation to a "market performer" and said he believes the stock is fairly priced at $20 a share.
Vogel said he had forecast revenues of $14.6 million, with $6.7 million coming from eBusiness Technologies and $8.9 million from Information Exchange.
He said the revenue shortfall was due to missed sales execution; said management indicated the sales team attempted to secure three strategic licenses, each of which would have "made" the quarter, but company failed to close any of the three deals, as well as a number of smaller deals.
Last quarter, Inso lost $3 million, or 19 cents a share, on sales of $19.4 million.
Its shares moved up to a 52-week high of 42 in January after falling to a low of 4 1/2 in July.