ON Technology's 1Q, shares way off

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ON Technology Corp. (Nasdaq: ONTC) plunged 37 percent Monday after the company said its first quarter results will disappoint.

The company said it expects to lose between 20 cents and 22 cents a share, well below First Call's break-even consensus.

Shares of ON Technology were off 3 1/2 to 5 7/8 near midday.

While the company in a release said its "long-term growth" was "on track," its short-term results won't please investors. The stock had risen to 9 3/8 Friday from a 52-week low of 1 5/16.

The company's ON Command software manages networked PCs from a central console, enabling technicians to administer upgrades and change default settings from a remote location.

ON Technology said its earnings shortfall is a direct result of weak revenue, which is expected to be between $4 million to $4.3 million. The revenue shortfall is due to an increased emphasis in attracting larger enterprise customers, computer OEMs, service providers and value added resellers. Several transactions didn't close in time, the company said.

ON Technology also reported a slow start to the first-quarter with IT executives "decompressing from the Y2K frenzy," as a secondary factor.

The company said multiple transactions from large enterprises new opportunities from service providers and reseller channels are in the works.

But "many of these opportunities are presently in a pilot or proof of concept stage," said CEO Bob Doretti in the release. "However, on-going negotiations are proceeding expeditiously allowing us to remain optimistic that these delays will translate into higher sales over the longer term," he added.

The company reports its first quarter results April 18 after market close.

ON Technology's competitors include Microsoft (Nasdaq: MSFT), IBM (NYSE: IBM) and Computer Associates (NYSE: CA).

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