"We just processed our final numbers over the weekend which is why we are publishing our profit warning for the quarter now," Lumenis (Nasdaq:LUME) (LUME) CEO Yacha Sutton said upon releasing the company's serious warning. "We are careful to publish preliminary results as soon as we have them as part of our transparency to investors," he added.
A week before the company is due to publish its Q1 2002 financials, the company released a grave warning. After its Q4 2001 reports were the eye of an accounting practices storm, the company cannot seem to rehabilitate the confidence of its investors.
The company announced its revenues will come to $86 million for the quarter, not the $90 million in its early projections. This represents a 15% drop from the last reporting period. The company also announced it will post a loss and it now expects net profits to be between a 4 cent per share loss to break even, nowhere near the 21 cent profit in the average analyst projection.
The preliminary results show a big gap between the slight miss on the revenue line and the sharp drop in the bottom line and the transition to loss. On the top line, the company was $4 million off-target, but the bottom line is a long way from the average analyst projection of $7.7 million profits to red ink of anywhere between $40,000 and $1.5 million. According to Sutton, the reason for the gap between the top and bottom lines is increased financing costs on the financing agreement the company signed with Bank Hapoalim during the quarter, as well as charges associated with the integration with CMG.
Due to the warning, the company's share is trading down 40% on exceptionally high turnover. Sutton attributes the drop in share price in recent days to speculators¿ profit taking, but doesn't rule out the possibility of leaks. The share lost 8.5% yesterday alone, hitting a 52-week low. "It is hard for me to comment on the matter, I doubt news of the warning leaked out and think it is due to speculative trading," he says.