IRVING, Texas ( TheStreet) -- Shares of CEC Entertainment ( CEC) plummeted nearly 10% Friday morning after the operator of Chuck E. Cheese's restaurants forecast earnings below Wall Street's expectations.

CEC Entertainment said late Thursday it now expects to earn between $2.52 and $2.62 per share in 2010, down from its previous guidance for earnings of $2.70 to $2.80 per shares. Analysts' consensus call is for earnings of $2.83 per share.
Chuck E. Cheese

Sterne Agee lowered its EPS estimate by 17 cents to $2.66 for 2010, and by 11 cents to $3.00 per share for 2011, based on the expectation for lower same-store sales. The brokerage firm maintained its buy rating on CEC shares, however, noting the company's dominant market share position in the child entertainment segment.

CEC booked profits of $4.8 million, or 22 cents per share, in the three months ended July 4, compared with year-earlier earnings of $9 million, or 39 cents per share. The company said a 2% decrease in revenue, to $181 million, and a 2.2% dip in comparable same-store sales, reflected reduced discounts on many of its coupon offers.

"We believe our pricing strategy to reduce coupon discounts at a time when the economy not only did not improve but may have in fact softened somewhat hurt our topline," CEO Michael Magusiak said on a conference call with investors and analysts.

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