Calpine Sinks on Stock Sale, Lowered Guidance

Power provider

Calpine

(CPN)

was down almost 13% a day after the company said first-quarter earnings would fall short of estimates.

The company also said its full-year earnings could come in below expectations, partly as a result of a new stock issuance, but also because of continuing uncertainty about an economic recovery.

Calpine expects to earn 10 cents a share in the first quarter, excluding a nonrecurring charge of $168.5 million, or 35 cents a share, for the cost of canceling equipment orders, and other items. Including those items, Calpine is projecting a loss of 25 cents a share.

Analysts were expecting earnings of 12 cents a share, according to Thomson Financial/First Call. In recent trading on Wednesday, shares of Calpine were down $1.70, to $11.63. The decline erased some of the gains the stock collected in the last two sessions as a result of Calpine's successful renegotiation of electricity contracts with California.

For the full year, Calpine said it would earn between $1.50 and $1.60 a share, before items, in comparison to analysts' consensus estimates for earnings of $1.57 a share for 2002.

In a statement, Calpine said its year-end estimate reflects "continued uncertainty over the timing of an economic recovery as well as a return to more normal weather, and a gradual improvement in pricing."

The power company also announced it would sell up to 60 million newly issued shares and grant an over-allotment option to the underwriters for an additional 9 million shares. The power company said that its 2002 earnings forecast factors in dilution from the equity offering.