Cysive Inc. (Nasdaq: CYSV) plummeted 46 percent Thursday after forecasting weaker-than-expected third quarter financial results, due to a customer's failure to pay up.
Shares in the builder of electronic business systems for corporate clients plunged 6 3/8 to 7 5/8, or 46 percent, and Legg Mason downgraded the stock from "strong buy" to "buy" following the news.
Cysive announced Wednesday that due to the termination of a contract with CorPay Solutions Inc., third quarter revenue will be about $3.9 million lower than anticipated and fourth quarter revenue will be $1.5 million lower.
The termination will result in an impact anticipated to the third quarter from loss of revenue, costs incurred, bad debt expense and other charges which are expected to total $5.0 million, or 12 cents a share, after tax, on a fully diluted basis.
``While we regret being forced to make this decision, the termination of the CorPay contract will free up valuable engineering resources for existing and new clients.'' said Nelson A. Carbonell, Jr., Chairman, President and Chief Executive Officer of Cysive.
The company has paid a total of approximately $4.5 million for services rendered since October 1999. The company said it will take the necessary legal steps to recover the amounts owed by CorPay under the contract and protect its intellectual property rights.