SYKE, overdone today and looking for a bounce tomorrow <<Tampa, Florida, Jan. 25 (Bloomberg) -- Sykes Enterprises Inc. shares fell 51 percent after the operator of call centers for computer makers and Internet service providers said it would miss analysts' fourth-quarter earnings estimates.
The shares fell 24 1/4 to a 52-week closing low of 23 on the Nasdaq National Market, reducing Sykes' market value by about $1 billion, to $974 million. Tampa, Florida-based Sykes had the biggest percentage decline of any stock in U.S. markets.
Sykes warned that it expects to report fourth-quarter profit of 20 cents to 22 cents a share, less than the 37-cent average forecast of analysts polled by First Call/Thomson Financial. In the year-earlier quarter, it earned 28 cents a share. Sykes also said it expects fourth-quarter revenue of $160 million to $162 million, up from $142 million a year earlier. ``This is very disappointing, there is no doubt about it, and that's why the stock has taken such a hit,' said Stephen Shook, an analyst at Wachovia Securities. ``The stock isn't worth half of what it was. This thing is a little overdone.'
Two other analysts cut their ratings on Sykes today. Shook said he downgraded the stock to ``neutral' from ``strong buy' last week because he thought the shares, which had risen 61 percent in the past year as of yesterday, wouldn't gain more.
Sykes runs 38 call centers that provide technical support for customers of companies such as Microsoft Corp., Apple Computer Inc. and International Business Machines Corp.
Surprised by Shortfall
Sykes blamed foreign-currency transactions, training and development costs for new contracts, and a unit that didn't meet expectations. The earnings shortfall would be the company's first since it sold shares to the public in 1996. ``We're extremely disappointed in the need to recast our numbers for the fourth quarter,' said Sykes Chairman and Chief Executive John H. Sykes in a teleconference. ``We were surprised at the magnitude of this situation."
The company expects to earn 40 cents a share in the first quarter, 10 cents more than the average forecast of seven analysts polled by First Call, as it expects to get about $10 million from delayed contracts, said Chief Financial Officer Scott Bendert. He said Sykes this year expects to earn as much as $1.59, or 8 cents more than the First Call average forecast.
Fourth-quarter revenue was reduced by $4 million because of the euro's fall against the dollar, which made currency conversion more expensive, and another $4 million because of problems at Sykes' SHPS Inc. unit, Shook said. SHPS runs call centers for health-care providers, he said.
Sykes officials didn't provide more information in a statement or answer questions about reasons for the earnings shortfall during its teleconference. Company officials didn't return phone calls seeking comment.
The company has 14,000 workers in the U.S., Canada, Europe, Africa and Central America. Its 1998 revenue was $469.5 million. |