Shares of ITT Educational Services ( ESI) dropped again Wednesday, after the company said it can no longer back its forecast for full-year 2004 earnings estimates because of a federal investigation of the company by the Department of Justice.

"In light of the pending federal grand jury investigation of the company and resulting shareholder class-action lawsuits, the company is not able to confirm the internal goals and other projections for the company's 2004 fiscal year that were previously disclosed," the company said in a Form 8-K filed with the Securities and Exchange Commission.

In October, the company had forecast 2004 earnings of $1.46 to $1.50 a share on a revenue increase of 14% to 17%. Analysts had expected $1.60 a share. The company earned $1.23 a share in the previous year.

Shares of ITT were lately down $1.65, or 4.5%, at $34.87. The stock is currently off about 40% from its Feb. 24 closing price of $57.40, which was the day before news of the federal investigation broke.

Speaking at Merrill Lynch's 7th Annual Advertising/Marketing, Education & Information Conference, ITT's Chief Executive Rene R. Champagne said that investigators had wanted documents about student metrics as well as information about the company's personnel, including himself, a Dow Jones Newswires report said.

Meanwhile, ITT reported that three of its senior officers were named as defendants in a class-action lawsuit filed on Feb. 26 in a southern Indiana U.S. District Court.

"The complaint alleges, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b- 5 promulgated thereunder, by employing devices, schemes and artifices to defraud, making untrue statements of material fact and/or omitting to state material facts necessary to make statements not misleading and engaging in acts, practices and a course of business which operated as a fraud and deceit on the purchasers of ITT/ESI's securities in an effort to maintain artificially high market prices for its stock," ITT said in a statement.

If you liked this article you might like

Hot Topic's Relief Bounce

Hot Topic's Relief Bounce

Limited Brands Profit Jumps

Limited Brands Profit Jumps

Glitch Lingers at Ross Stores

Glitch Lingers at Ross Stores

Dillard's Halves Loss

Dillard's Halves Loss

Do-It-Yourself Boost for Economy

Do-It-Yourself Boost for Economy