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Micro Warehouse in doghouse

Micro Warehouse announces its earnings for the fourth quarter will be lower than expected, driving the stock to drop 37 percent in trading.

Micro Warehouse (MWHS) today announced its earnings for the fourth quarter will be "significantly" lower than expected, causing the stock to plummet 37 percent.

Shares of Micro Warehouse, a computer mail order company, closed at 12-1/2 per share, down 7-1/2 from the previous day.

Wall Street expected the company to post earnings of 34 cents a share, according to First Call.

The announcement marks the second hit the company has taken in recent months, when it announced in October it would restate its 1995 and 1994 financial results. The company said it expected to incur an $18 million after-tax charge from its restatement. Micro Warehouse's stock had been trading around $30 per share prior to that announcement.

Under its most recent announcement, the company said increased legal and accounting fees related to its financial restatement has driven up operating expenses. Its shift in product mix from Apple to the Microsoft-Intel platform had depressed gross profit margins, the company stated.

"The decline in gross margin and the additional expenses have come at a time when the company has invested in additional catalog mailings and space advertising to grow its customer base," said Linwood "Chip" Lacy, chief executive, in a statement.

Micro Warehouse said sales for the quarter ending December 31 are expected to fall within analysts' expectations.