Updated from 12:50 p.m. EST
plunged on Monday after the financial services company warned that its first-quarter earnings would not meet Wall Street's estimates.
In addition, the company said its chairman, president and chief executive, Samuel Eichenfield, resigned for health and personal reasons.
Finova's shares recently fell 11 3/4, or 37%, to 20 1/8. (Finova closed down 5/16, or 1%, to 19 15/16).
Finova said its earnings would be depressed by a special charge of $80 million to bolster loss reserves and pay for deferred compensation and executive severance. The loss reserves will go to covering first-quarter write-offs stemming from a $70 million loss from an unnamed private customer of Finova's distribution and channel finance division.
Reilly Tierney, an analyst at
, said Monday the loss reflected an equity stake the company took in a computer distributor that Finova subsequently decided to list as a write-off.
Tierney, who downgraded the stock to a hold from a buy following the announcements, said the news of the write off was just the latest in a long line of disappointments.
"This is one more in a series of credit hiccups," said Tierney, noting that the company's strategy of taking larger exposures on larger risk companies has dampened the company's performance.
"The economy is doing pretty well and you shouldn't be having these kinds of problems," Tierney added.
Wall Street had expected Finova to earn 92 cents a share, according to a survey of brokers conducted by
First Call/Thomson Financial
. The Scottsdale, Ariz.-based company did not offer a revised earnings estimate.
"Excluding the charge, Finova expects to meet Wall Street's expectations for the first quarter, and we remain comfortable with achieving the consensus estimates for the remaining quarters of 2000," Matt Breyne, Finova's newly appointed president and chief executive, said in a statement.
The company was not immediately available for comment.
Tierney said that Eichenfield's resignation also jolted the stock.
"It's the resignation of a CEO who has totally personified the company," said Tierney. "He was expected to retire in 2002 at 65 years of age."
Finova did not detail the health and personal reasons that led Eichenfield to take early retirement and Tierney said that the analysts were also not provided with any details.
Prior to being appointed president and chief executive, Breyne had been director, president and chief operating officer of Finova subsidiary
, where he will continue as president and assume the positions of chairman and chief executive.