DryShips All Wet

Updated from Oct. 12

The DryShips (DRYS Quote) sank 7% after the company said unwinding a failed hedging strategy will lop 68 cents a share off third-quarter earnings.

Analysts surveyed by Thomson Financial were looking for a 69-cent profit.

"Earlier this year the Company took the decision to enter into freight forward agreements to protect against a declining market going into the seasonally low summer period," the DryShips CEO, George Economou, said. "Against expectations the freight market staged a contra-seasonal recovery.

"When this became apparent," Economou added, "the company settled or closed its positions.

"Despite the negative impact limited to the third quarter earnings," he continued, "we are happy the market has turned out much stronger than expected. With the size and deployment of our fleet we are now confident that going forward we can take full advantage of the strong drybulk market and maximize earnings for our shareholders."

DryShips said it has no open freight-forward deals right now.

Shares fell $1.01 Friday to $12.78.