LeapFrog ( LF) was flattened Thursday after the company lowered revenue and earnings guidance for the first quarter, reprising a catastrophe to which investors must be growing accustomed. The maker of educational devices for kids expects to lose 18 cents to 22 cents a share in the quarter on revenue of $66 million to $72 million. In addition to the sales shortfall, the loss reflects weakened gross margin and a higher expense for research and development. Analysts had been expecting a loss of 6 cents a share on revenue of about $87 million. While the company noted the first quarter "is a very small portion of our overall year," investors relinquished a very large portion of its overall value. The shares were recently trading on the Instinet premarket $17.80, down $8.23, or nearly 32%. Part of the reason for the extreme reaction is that LeapFrog unleashed a similar earnings surprise in October, when it said third-quarter sales would trail estimates because of tightening purchasing schedules among its buyers. The stock tanked anew when the company warned on sales growth for the year in its fourth-quarter earnings release. As for the first quarter, LeapFrog said, it's "particularly vulnerable to trends that impact our net sales, margin and net income, including the shifting of retail orders to later in the year, and the difficult financial position of certain retailers." The company, which said it wouldn't hold a conference call to explain the guidance, stood by its 2004 spending plans. "In order to finalize products for 2004 and ensure the timely development of exciting new products for 2005, we are maintaining our projected level of spending on research and development this year," the company said. LeapFrog also noted its incurring "significant legal expenses" to protect its intellectual property, and vowed to strengthen its operations group, supply-chain management system and warehousing and logistics functions. Analysts jumped all over the shares Thursday morning. Among others, CSFB lowered its recommendation to underperform from outperform.