NEW YORK (AP) ¿ DealerTrack Holdings Inc., which makes software for auto dealers, slipped in midday trading Thursday as Chrysler and General Motors announced they would shut down a significant chunk of their domestic dealerships.
Chrysler LLC on Thursday announced it would shut down a quarter of its 3,200 U.S. dealerships, while General Motors Corp. has said it will reduce its dealers by about 2,600 by 2010. On Thursday, GM said it was telling 1,100 dealers their franchise agreements would not be renewed next year.
"Pending dealership closings and declining auto sales are likely to weigh on near term results," said Barclays Capital analyst Israel Hernandez in a note to investors Thursday, even as a meeting with DealerTrack's CEO on Wednesday left him positive on the company's prospects for market share gains in the long term.
The company's 2009 revenue guidance of $232 million to $238 million excludes the impact of GM and Chrysler dealerships closing, Hernandez said, but the company said its year revenue would be cut by $6 million, and profit by 5 cents per share, if 30 percent of Chrysler and GM dealers (about 2,900 GM dealers) are closed by the end of next year.Shares of DealerTrack slipped 1.9 percent, or 26 cents, to $13.16 in midday trading. Earlier in the session, shares had fallen as low as $12.90. In the past year, they have traded between $8.84 and $22.72.