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Visio tanks on 3Q profit warning

Shares of Visio Corp. (Nasdaq: VSIO) plunged 31 percent, or 12 7/16 to 26 1/2, Friday after the company said its third quarter earnings would be between 29 and 30 cents a share, below the expected 35 cents a share estimated by First Call.

The company, which makes diagramming and technical drawing software, said a slowdown in sales and delays in closing a few large licensing agreements hurt earnings. It said earnings were expected on revenue of about $50 million for its third quarter, ended June 30. An analyst consensus had estimated earnings of 35 cents a share based on and revenue of $53.5 million.

"Several corporate licensing agreements did not close in the quarter as anticipated,'' President and Chief Executive Jeremy Jaech said in a company release. ``In addition, we continued to be affected by an industry-wide shift away from the sale of packaged product through the traditional distribution channel and expect that this will remain a factor throughout fiscal 1999," he added. Jaech also said that the Visio 5.0 product line is nearing the end of its life span, but that the company will remain focused on bringing the successful Visio 2000 technology to the corporate market.

Visio also estimated fourth quarter revenue would total about $61 million to $62 million, at the low end of expectations. It beat estimates for the quarter ending in April, but slipped on fourth quarter earnings, despite meeting expectations. Five out of 9 analysts covering the stocks rated it a "strong buy," while 3 rated it a "hold" according to Zacks Investment Research.

Volpe Brown Whelan & Co. issued a statement Thursday saying it maintained its "strong buy" stance on Visio shares. It said the company's failure to meet expectations was a "minor setback" resulting not from problems, but a continued struggle to "complete a transition from indirect to direct sales." Though they have lowered estimates for the fiscal year to $1.35 a share from $1.43, they believe Visio should be back on track by September. They have left estimated earnings of $1.90 a share for the year 2000 unchanged. "Investors should take advantage of any weakness in the share price to accumulate the stock," the report advises.

The company plans to release definitive June quarter results on July 21.