These five stocks saw increased downside pressure on increased volume Tuesday after company announcements that were viewed negatively by investors.
NetScout Systems (NTCT) tumbled over 19% after giving weak Q1 and FY12 guidance due to weakness from its government and financial customers. The company said that its U.S. government new business bookings suffered substantially from budget holds and its traditionally strong financial services new business was weak, likely due to the profit pressure that its financial customers are currently experiencing. The company was, however, successful in growing its service provider and non-financial enterprise businesses y/y. The company lowered its FY12 outlook because of its shortfall in Q1. NetScout added that its product pipeline is strong, and it remains enthusiastic about its position as the market leader in Unified Service Delivery Management.
The St. Joe Company (JOE) fell more than 9% after it disclosed that the SEC is investigating the company in an 8-K filing. The company noted that it previously disclosed in January 2011 that the SEC is conducting an informal inquiry into the company’s policies and practices concerning impairment of investment in real estate assets. On June 24, 2011, the company received notice from the SEC that it issued a related order of private investigation. The order of private investigation covers a variety of matters for the period beginning January 1, 2007. The one matter that is receiving the most focus is the SEC’s investigation of compliance by people who were or are directly or indirectly the beneficial owner of more than 5% of the company’s common stock (which includes Fairholme Funds, Fairholme Capital Management and the company’s current Chairman Bruce Berkowitz) with their reporting obligations.
Advanced Energy Industries (AEIS) closed down nearly 12% after it cut its Q2 outlook. The company said that it now expects to report revenue between $137-$140 million for Q2, below the range of $148-$160 million it projected on May 2, 2011. It also expects earnings at the low end of, or slightly lower than the range it projected on May 2, 2011. The company noted that the performance of its renewables business drove its lower than expected Q2 revenue, while its thin film business performed in-line with its expectations. Advanced Energy’s results were primarily impacted by changing solar market conditions driven by panel price declines, short lead-times for components, and permitting and financing delays. These trends are causing some customers to push-out purchases until panel prices stabilize, leading to the postponement of construction of their projects. Additionally, changing incentive programs in certain regions, coupled with increasing competition, affected the quarter and continue to be ongoing industry dynamics.
Western Union (WU) fell more than 4% after it announced that it will acquire Travelex Global Business Payments for £606 million ($969.6 million) in cash. Travelex Global Business Payments (TGBP) conducts business payments annually for 35,000 customers in 14 countries. Projected 2011 revenues for TGBP are approximately £150 million ($239 million), with a normalized EBITDA margin of approximately 30%. Western Union expects the combined TGBP / Western Union Business Solutions revenue to grow at an approximately 10% CAGR over the next three years, with accelerated longer-term growth and margin expansion opportunities once integration activities have been completed. Integration expenses are anticipated to be approximately $70 million over two years, with synergy savings of approximately $30 million annually after full integration (estimates are based on current exchange rates). The TGBP acquisition is anticipated to be dilutive to Western Union’s GAAP EPS by approximately $0.02 in 2011 and approximately $0.04 in 2012 due to deal and integration costs and non-cash amortization expense. The acquisition is expected to be accretive to 2013 GAAP EPS by approximately $0.04.
OM Group (OMG) fell 3.5% after it that it signed a definitive agreement to purchase Vacuumschmelze GmbH (VAC) of Hanau, Germany, an advanced materials and specialty magnetics company, for approximately 700 million euros, including $50 million in common stock equity. Founded in 1923, VAC is widely regarded as one of the premier designers, producers and marketers of the world's most technologically advanced materials and technologies. Among other things, the company has number-one global market positions in its Materials & Parts and Cores & Components units, and a leading global position in its Permanent Magnets unit. In FY11, VAC recorded revenues of approximately euro 389 million and operating profit of euro 54 million, on an IFRS basis. Excluding one-time items related to the acquisition, OM Group expects the acquisition to be accretive to earnings in fiscal 2011.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.