Shares of IT operations management solutions provider Avocent Corp. (AVCT) fell Friday morning after the company reported a drop in second quarter profit after the closing bell on Thursday.
The stock dropped nearly 13%, down $3.08 to $21.60 a share by 10:25 am Eastern Time. Shares of the Huntsville, Alabama-based company broke through support and hit their lowest level in about two weeks.
Avocent reported net income for the second quarter that decreased from last year, primarily on higher expenses. The company also issued financial guidance for the third quarter.
The company reported net income for the second quarter of $3.4 million or $0.08 per share, down sharply from $15.0 million or $0.29 per share in the year-ago quarter.
Net income on a non-GAAP basis for the quarter was $18.39 million or $0.41 per share, compared to $21.13 million or $0.41 per share in the last year quarter.
On average, analysts polled by First Call/Thomson Financial expected earnings of $0.43 per share for the quarter.
Net revenues for the quarter increased 6% to $159.2 million from $150.23 million in the prior-year quarter, beating analysts' estimate of $154.76 million.
Cost of sales for the quarter rose to $59.29 million from $55.14 million in the same quarter last year.
Research and development expenses excluding stock-based compensation increased 16% to $23.0 million from $19.8 million in the second quarter of 2007. Selling, general and administrative expenses, excluding stock-based compensation, were $54.7 million, up 12% from $49.0 million a year ago.
For the six-month period, net income fell to $4.17 million or $0.09 per share from $15.75 million or $0.31 per share last year. Net income on a non-GAAP basis declined to $32.85 million from $33.85 million a year ago. Earnings per share on a non-GAAP basis net income increased to $0.71 from $0.66 previous year.
Net sales for the six-month period rose to $300.58 million from $283.38 million prior year.
The company expects third quarter revenues to be in the range of $175 million to $183 million with earnings on a non-GAAP basis are estimated to be in the range of $0.54 per share to $0.58 per share.
Analysts currently expect earnings of $0.52 per share on revenues of $168.06 million for the third quarter.
Earlier in July, Avocent announced that it completed the acquisition of Touchpaper Group Ltd, a privately-held UK-based provider of IT business management solutions, for about $45 million. The company also announced that it signed a definitive agreement to acquire the assets and liabilities of Ergo 2000, Inc., a California-based privately-held provider of rack-mounted LCD consoles, for about $27.5 million. Avocent said it expected each acquisition to be accretive to operational earnings per share in 2008 and expected to close the Ergo 2000 acquisition later this quarter.
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