Dim Reality at Sharper Image

The shares tank after it forecasts a loss in its current quarter.
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Shares of

Sharper Image


were under pressure Friday after the company unexpectedly predicted it will lose money in its third quarter and was downgraded by J.P. Morgan.

The San Francisco-based gizmo retailer, which also reported an in-line second quarter, expects to lose 8 cents to 11 cents a share in the three months ending in November. Analysts surveyed by Thomson First Call had been expecting earnings of 5 cents a share.

"This guidance is based on lowering sales for the third quarter relating to softer-than-expected sales in the first half of August," the company said. Sharper Image also dropped full-year guidance to earnings of $1.65 to $1.69 a share from its previous $1.83 to $1.87 a share.

The stock was trading at a 52-week low of $15.45 on Instinet, down $1.45, or 8.6%, from Thursday's close.

Second-quarter revenue rose 20% from a year ago to $149.0 million on a 1% gain in same-store sales. Total catalog and direct marketing sales rose 28% from a year ago to $39.0 million.

J.P. Morgan cut the shares to neutral from overweight and slashed its 2004 earnings estimate to $1.41 from $1.64.