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Stocks to Watch: Oak, ATI Tech and Caraustar Plunge on Warnings

The Day's Winners

  • Shares of e-business relationship company Netegrity (NETE) jumped 12% to $6.12 in early trading on news that the company has signed a new multi-faceted agreement with HP. HP will resell Netegrity's Secure Relationship Management platform, and the HP Services division will expand its security practice to bring in Netegrity products. The two companies also plan to develop multiple integration points between their respective products. Netegrity said the agreement will allow its services to reach new markets and facilitate the delivery of those services.

  • Dutch telecom company Versatel (VRSA) was climbing about 30% to $3 on news that the company will file for bankruptcy protection to help speed the conversion of its debt to equity. The high speed Internet access company said the bankruptcy filing cuts the need for it to have 99% bondholder approval for the restructuring, moving the timetable for the restructuring up by about three months. Versatel already has support of the majority of its bondholders for the action, but the company plans to ask the court to force the other holders to convert the high-yield bonds of its 1.7 billion euro debt into equity shares and cash.

  • Trucking company Celadon Group (CLDN) tacked on about 15% to $12.95 after raising its fourth-quarter earnings outlook. The company said it now expects to earn 12 cents to 14 cents a share, up from a loss of 5 cents a year ago and ahead of the Thomson Financial/First Call consensus estimate of 11 cents. Celadon said the growth is driven by cost cutting measures and higher revenue associated with the integration of customers from Burlington Motor Coaches, which it purchased in March. The company added that it expects the Mexican border to be opened this summer, which should positively impact earnings going forward.

  • AES Corp. (AES) was gaining 12% to $5.63 on news that electricity and natural gas provider Ameren Corp. (AEE) plans to buy AES's electricity unit Cilcorp. Ameren filed an application with the Illinois Commerce Commission to make the purchase of its rival, which AES is selling as part of its plan to raise as much as $1.5 billion and cut spending. The $1.4 billion deal, which includes the assumption of debt, could be dependent on Ameren's pledge to continue to operate Cilcorp as a separate unit and to preserve existing electric rates.

    The Day's Losers

  • Recycled product manufacturer Caraustar Industries (CSAR) dropped 12% to $10.66 in early afternoon trading after the company lowered its outlook for the second quarter, saying costs have risen for the containers it recycles. The company now sees second-quarter results ranging from a loss of 3 cents a share to a profit of 2 cents, below the consensus estimate of a profit of 5 cents. Caraustar said its shortfall will be caused primarily by a rise in the price of corrugated containers, the company's primary source of fiber it uses in recyling, to $90 to $100 per ton from $40.

  • Semiconductor and software storage company Oak Technology (OAKT) plunged 46% to $5.31 after the company slashed its fourth-quarter outlook, citing a slower-than-anticipated PC market, especially in Europe. Oak now sees a loss of 5 cents to 9 cents a share for the quarter, down substantially from the consensus estimate of a profit of 4 cents. The company also said it expects a sequential decline in revenue from last quarter's $42 million to somewhere around $34 million to $36 million. Oak blamed the shortfall on order deferrals and delays resulting from the weak PC environment.

  • Shares of ATI Technologies (ATYT) dropped about 14% to $8.54 after the company warned of a fourth quarter earnings shortfall. The company said its third-quarter earnings were in line with estimates at 8 cents a share on an adjusted basis, but predicted softness in the fourth quarter. ATI sees a weak system integrator market, causing revenue to be flat to slightly down and adjusted EPS to be 5 cents to 7 cents a share. Analysts polled by First Call had been looking for revenue growth and EPS of 10 cents a share for the quarter.

  • Technology company Rambus (RMBS) fell 22% to $5.20 on news that the Federal Trade Commission has filed an antitrust suit against the company. The FTC charges that Rambus has been participating in an industry standard-setting association without disclosing that it had a patent and pending patents for technologies that the group eventually adopted. The FTC could force Rambus to abandon enforcement of several key patent claims worth over a billion dollars in royalties. Rambus said it would provide comment once its general counsel reviewed the complaint.

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