(REUTERS) RESEARCH ALERT - Sykes cut to market perform
RESEARCH ALERT - Sykes cut to market perform
NEW YORK, Feb 7 (Reuters) - Banc of America Securities
analyst Jim Janesky said Monday he lowered his rating on Sykes
Enterprises Inc. <SYKE.O> to market perform from strong buy.
-- shares of Sykes were off 3-3/8 trading at 14-9/16 on the
Nasdaq stock market.
-- Janesky said Sykes reported fourth quarter earnings of
17 cents per share and a fiscal 1999 EPS of 60 cents per share,
below Janesky's estimate of 20 cents per share for the quarter
and $1.03 for the year.
-- said earnings for the second and third quarter of 1999
have been restated to 9 cents from 27 cents per share and to 10
cents from 33 cents per share, respectively.
-- said the company is also giving new guidance for 2000 of
$1.10 per share.
-- said the company has decided to recognize all costs
related to pending contracts, but no revenues. The recognition
of costs, but not revenues defies the accounting logic of
matching revenues with expenses in any given period.
-- said there is no visibility for 2000. On the conference
call, management stated that, on advice of counsel, they are
unable to comment on performance in 1999.
-- said lawsuits could prevent the company from signing
pending contracts.
-- said the company previously said it was unable to
recognize revenues related to three contracts that were being
performed, but had not been signed. One contract was related to
a current client, Adobe Systems Inc. <ADBE.O>, which the
company said was signed on Monday. The other two contracts are
new.
-- said Sykes has indicated the lawsuits may complicate the
company's ability to sign the new contracts.
-- Janesky believes Sykes is still in discussions with its
auditors regarding appropriate revenue recognition principles,
which makes it more difficult to have confidence that future
earnings per share expectations won't be revised downward.
-- said although the stock currently trades at 13 times
Janesky's 2000 estimate of $1.10, he cannot say with sufficient
confidence that earnings estimates represent a trough for the
company.
(( -- New York Technology Desk 212/859.1860))
REUTERS
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