These stocks were some of the biggest losers last week, despite the stock market rising nearly 6%.
Biolase Technology (BLTI) dropped 25% to $4.05 after the company announced disappointing preliminary Q2 results. The company said that it expects to report net revenue of approximately $12.0 million, up 104% y/y but short of analyst estimates of over $14 million. Approximately $2 million of orders received in the second quarter were unable to be shipped by June 30, primarily due to the timing of a significant change order placed by Henry Schein and the resulting last minute delays of critical components. Excluding royalties of $375,000 and $1.1 million in the second quarter of 2011 and 2010, respectively, this represents an increase of $6.8 million, or 142%, period over period.
Biolase originally planned its second quarter production and organized its supply chain accordingly, anticipating that it would continue to produce iLase systems in order to fulfill the final $3 million of the $9 million of purchase orders from Schein with the iLase system. This prepaid purchase order gives Schein certain rights and priority of delivery. Some critical components have long lead times and require orders to be placed months in advance. Schein informed the company that it was changing its order from iLase systems to a combination of the Waterlase iPlus and, to a lesser extent, the ezlase, on April 28, well after the start of the second quarter.
Powerwave Technologies (PWAV) fell 22% after issuing Q2 and FY11 guidance. Powerwave announced that it anticipates that revenue for Q2 will be in the range of $168 million to $172 million vs. analyst forecast of $170 million. The company further said that it continues to believe that it is on track for meeting the bottom range of its 2011 annual revenue guidance of $650 million to $680 million.
Investment Technology Group Inc. (ITG) tumbled 20% after issuing weak Q2 guidance and announcing cost cuts on Tuesday. The company announced a cost reduction plan to improve margins and enhance shareholder returns in the face of continued weakness in institutional equity trading volumes in the U.S. and Europe. The cost reduction plan is primarily focused on employment, consulting, and infrastructure costs in the U.S. and Europe. This plan is expected to generate pre-tax cost savings in 2012 of more than $20 million, or approximately $0.30 per diluted share after taxes. The cost savings will begin to take effect during the third quarter of 2011. ITG will incur pre-tax charges associated with this plan estimated at between $16 million and $18 million, or between $0.23 and $0.26 per diluted share after taxes, in the second quarter of 2011.
ITG also announced plans to record a second quarter 2011 non-cash goodwill impairment charge in its U.S. reporting unit estimated at between $210 million and $230 million, or between $4.50 and $5.00 per diluted share after taxes. The impairment was driven by weak institutional equity trading volumes and the decline in industry market multiples. This non-cash charge brings ITG's book value more in line with its market capitalization and has no impact on debt covenants, cash flows, or normal day-to-day business operations.
The weak volumes and pressure on revenue capture due to product and client mix shifts continue to weigh on ITG's results. ITG expects a U.S. GAAP loss per diluted share for the second quarter of 2011 of between $5.18 and $4.62, including the impact of the goodwill impairment charge, the cost reduction charge and expenses related to the acquisition and integration of Ross Smith Energy Group. Adjusted earnings per diluted share for the quarter, exclusive of these items is expected to be between $0.12 and $0.15. Analysts were expecting EPS of $0.20.
On Thursday, the company made changes in senior management. David Stevens took on a new role as Head of U.S. and Latin America, based in New York. Jamie Selway was named ITG's Head of Liquidity Management, as well as ITG's derivatives business. Jeff Bacidore joined ITG as head of algorithms, reporting to Selway. Ralph Edwards joined the firm as ITG's derivatives strategist.
Stillwater Mining (SWC) tumbled 27% after the company announced an acquisition that disappointed investors. Stillwater Mining and Peregrine Metals announced that they have entered into a definitive agreement pursuant to which Stillwater will acquire all of the outstanding shares of Peregrine. The total purchase price is US$487.1 million, and assumes the exercise of all outstanding Peregrine options and warrants resulting in a CDN$34.4 million (US$35.7 million) contribution to treasury, and implying a net equity value of US$451.4 million.
The company also announced Q2 product guidance. Stillwater said that Q2 mined production of palladium and platinum totaled 142,700 ounces, an increase of 26.7% over the 112,600 ounces produced during the same period last year and 8.8% more than the 131,200 ounces produced during the first quarter of 2011. Mined production of palladium and platinum exceeded original estimates for the first two quarters of 2011. Based on updated estimates, the company is increasing its 2011 annual forecast for mined palladium and platinum production to 515,000 ounces from its original guidance of 500,000 ounces. The company further noted that it expects Q2 revenues of $222.6 million, including $139.7 million from sales of mined production and $82.9 million from recycling. The analyst forecast was for $201.5 million.
Fabrinet (FN) fell 22% after one of its customers terminated a supply agreement. In its 8-K filing, Oclaro (OCLR) delivered a notice of termination to Fabrinet under the Volume Supply Agreement, dated May 6, 2004, between the company and Fabrinet. Oclaro said that it is currently in discussions with multiple third party manufacturers, including Fabrinet, for one or more of such third party manufacturers to manufacture for the company those products that are currently being manufactured by Fabrinet under the supply agreement.