Mastech Corp. (Nasdaq: MAST) will have to lower their third quarter sights.
After market close Thursday, the IT services provider warned it would post lower-than-forecast third quarter profits. The company now expects to earn between 18 and 22 cents per share in the quarter, excluding non-recurring charges. First Call's survey of 13 analysts had predicted a profit of 26 cents per share.
A contract with a large systems integrator is coming to a close, Mastech said. The company also sees "general softness" in the IT services market.
Revenue will range between $116 million and $120 million. Mastech expects to take a charge of 5 cents per share related to cover costs related to end of the aforementioned contract. A similar charge is expected in the fourth quarter.
"The rapid winding down of business with this particular customer is part of our evolution, as Mastech increasingly focuses on delivering a full suite of IT services to end-user customers on a global basis," said Sunil Wadhani, co-chairman and CEO of Mastech. "We believe the softness in the IT services market results from a near term customer focus on Y2K related issues and that the long term prospects for this market continue to be extremely strong. ... Other key initiatives are under way and we remain very confident in our long-term outlook."
Adams Harkness Hill immediately downgraded Mastech to "accumulate" from "strong buy" following the company's announcement. At least one analyst expected bad news; shares of Mastech dropped 1 11/16 Wednesday after Raymond James cut the stock to "accumulate" from a "buy" rating. The stock closed Thursday's regular trading at 16 13/16, down 5/8 for the day.>