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Stocks in Motion: Chalone

Updated from 11:34 a.m. EDT

Shares of Ultimate Electronics (ULTE) were among the Nasdaq's losers Monday, falling 53.7% after the company warned that it is mulling a possible reorganization.

The retailer's lenders previously said they would need more reserves against various loans. And although the company's Thanksgiving weekend sales showed improvement, fourth-quarter sales have been "weak," Ultimate said. The company, as a result of that fourth-quarter weakness, anticipates that it will be in violation of one or more financial covenants under its credit facility. The company intends to ask for a waiver from its lenders, it said.

Ultimate said lower sales, the more stringent reserve requirements and potential loan covenant violation raise "substantial doubt about its ability to continue as a going concern." As a result, the company is exploring all of its strategic alternatives, including a possible reorganization of its business. Shares traded down $1.30 to $1.11.

Chalone Wine Group (CHLN) rose 17.5% after the company said it received an acquisition proposal that is superior to the $11.75-a-share merger price offered by Domaines Barons de Rothschild. The winemaker said that Rothschild has until Dec. 17 to present a counter offer to the $13.75-a-share offer received by the undisclosed suitor. If Rothschild does not offer a better deal, Chalone said it would terminate its agreement with Rothschild and pay a breakup fee of $2.475 million, which would be paid by the new acquirer. Shares traded up $2.06 to $13.85.

Shares of Tuesday Morning (TUES - Get Report) fell 17.3% after the retailer warned that fourth-quarter earnings would fall below expectations. The company expects earnings of 83 cents a share. Analysts surveyed by Thomson First Call had been expecting earnings of $1.05 a share. For the full year, the company expects earnings of $1.44 a share on sales of $890 million. Analysts had been expecting earnings of $1.67 on sales of $936.1 million. The company said weakness in some of its key decorative home categories and in some of its seasonal merchandise led to the bleak outlook. Shares traded down $6.27 to $30.01.
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