Investment houses covering multimedia digital systems maker
(Nasdaq:NICE) have been quick to downgrade the firm after its January 8, 2001 announcement.
Nice issued its second profit-warning, this time for its fourth quarter of 2000, slashed its earnings forecast for 2001, announced the dismissal of 20% of its workforce and the resignation of its Chairman Benjamin Levin.
downgraded the company from a Market Outperform to a Market Perform. The bank does not believe that Nice's shares will rise in the near future and anticipates heavy losses for the firm in 2001.
Analysts Elan Zivotofsky, Shimon Levy and Abraham Finkelstein have dramatically lowered their 2001 EPS forecast for Nice, from a profit of $1.1 to a loss of $1.8 per share. The bank also cut its earnings forecast for 2001 from $191 million to $123 million.
analysts Victor Halpert and Robin Nazarzadeh cut their Nice price target from $25 to $15. The analysts expect that the company will post a $1.05 loss per share in its first quarter of 2001 and a loss of $0.6 per share in its second quarter, following a reorganization effort. They project that Nice's expected switch to profit in its fourth quarter of 2001 will not spare it from an annual loss of $1.16 per share.
Salomon Smith Barney forecasts that Nice's 2001 revenues will reach $145 million, down from the bank's previous forecast of $191 million. The bank notes that Nice is still leading the digital recording market, which boasts an annual growth rate of 30%.
Witness and Infosys edging in on the action
Nice is likely to have a hard time this year. Its recovery plan is based on an increase in revenue, but customer growth usually suffers during a recession as do purchase orders.
In addition, Nice's competition is hot on its heels. If until mid-2000, Nice was the unrivalled leader in digital recordings, competitors such as Witness Systems (Nasdaq:WITS)and
(Nasdaq:CMVT) are moving fast to close the gap. Witness is expecting a 50% growth in 2001 and has released strong results for 2000. Infosys Comverse is also expected to release good results.
Video product targets casinos and prisons
Nice's video product NiceVision is expected to be its main growth engine during 2001 and generate sales of $26 million, representing a growth rate of 60%. The company is optimistic about its video sales as the product targets American casinos and prisons, both of which tend to be insulated from a fall-off in the general economy.