SFBC ( SFCC) has left investors feeling sick. With the market waiting for a much-anticipated update, the company finally announced Thursday night that it was
postponing its fourth-quarter earnings release, withdrawing its 2006 guidance and preparing for a "substantial" charge due to a "significant decline in business" at its Miami operations. The news came after TheStreet.com reported that short-sellers were expecting to see a potentially major hit to earnings as a result of pressures in Miami. They also raised questions about the company's financial reporting in general. After dropping 5.6% on Thursday, SFBC plummeted 17% Friday to $18.42. SFBC performs clinical drug trials for major pharmaceutical companies. However, the company's once-prized operations in Miami have suffered a downturn in the wake of a devastating expose by Bloomberg that pointed to testing irregularities. As a result, Wall Street had expected SFBC to lower its guidance and even announce some sort of impairment charge during its scheduled update on Thursday. But some analysts, including one who has been recommending the stock in recent weeks, found themselves caught off guard when the company delayed its report instead. "Management gave us what we least expected -- NO numbers," Jefferies analyst David Windley wrote on Friday. Thus, "we are suspending our rating pending greater visibility into the impairment and guidance issues raised in last night's inadequate press release." Windley has already tried with little success to obtain important answers from the company. He, like many, remains uncertain about the company's Miami operations in particular. Specifically, he wonders just how much cash flow that business can now generate and whether operations there have deteriorated even further in recent days. After all, SFBC itself was still reassuring investors with a sunny outlook as recently as last month. But some former employees, caught up in massive layoffs at the Miami center, have offered a much darker view to TheStreet.com. "They have no project managers left" in Miami, says a former supervisor who left the clinic in December. "People have left because there's no work. ... There are no studies -- there is no money -- coming in." SFBC declined to comment.