Clarus' Stock Gets Hammered After Poor Report - TheStreet

Updated from 10/25/00

Clarus

(CLRS)

shares plunged 43% in early trading Thursday after the company reported disappointing quarterly results Wednesday.

Shares of the business-to-business software company traded as low as $11.25, after closing at $19.89 during regular trading on Wednesday. Lately, the stock was rebounding somewhat at $12.31.

But like a bad joke, it wasn't just what Clarus said Wednesday, it was how the company delivered it. Clarus said technical difficulties prevented it from getting the press release containing its quarterly results out to news wires in time for its conference call with analysts Wednesday. When the numbers finally did come out at 6:34 p.m. EDT, they were ugly.

The company reported a loss of 54 cents per share, about three barn widths away from the

First Call/Thomson Financial

consensus estimate of a loss of 35 cents a share.

Clarus said revenue came in at $13.5 million for the quarter, up substantially from the year-earlier's $1.98 million but just 34% higher than the second quarter's $10.1 million. Competitors

Ariba

(ARBA)

and

Commerce One

(CMRC)

both turned in sequential growth of greater than 60% for the third quarter. And Clarus' $13.5 million in revenue was at the low end of what analysts were expecting.

It gets worse.

On the conference call that analysts stumbled through without the press release to guide them, CEO Steve Jeffery said the company lost four deals to Ariba and Commerce One that it was trying to close at the quarter's end. He also said the company had to take a $2.3 million write-off for one customer that couldn't pay its bill.

It was that write-off, a company representative said, that caused the company to miss its numbers. But even without that write off, analysts said the company would have reported a loss of 41 cents per share, still 6 cents worse than the consensus estimate.

Both

Chase H&Q

and

Stephens

downgraded the stock Thursday. Chase H&Q downgraded it to market perform from buy, while Stephens downgraded it to neutral from buy. (Both firms have done underwriting for Clarus.)

In a research note, Stephens analyst Scott Alaniz didn't hide his ire for being blindsided by the charge. "Clarus recognized the revenue from this customer in 1999, and even though this account was months past due, it was not addressed in

recent quarterly filings. It was also not mentioned in our discussion with management regarding accounts receivable credit quality. Needless to say, we were surprised," Alaniz wrote.

Clarus was already in hot water with analysts and investors, who had

wondered during the quarter whether the company would miss the estimates. They're not wondering anymore.