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eResearch Technology (Nasdaq: ERES), which provides centralized core-diagnostic electrocardiographic [ECG] technology and services to evaluate cardiac safety in clinical development, is getting very, very good at disappointing investors. The company is also in the business of providing technology and services to streamline the clinical trials process, allowing its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.

They appeared to be a promising business as recently as 2004, when revenue hit $109.4 million with operating income of $49.5 million. A really fantastic performance.

In the summer of 2004, the stock got close to $30. But, as 2005 passed, the numbers started to turn South. For the full year, the company had $86.8 million in revenue and an operating profit of $23.4 million. The best quarter was Q4, with revenue of $25.4 million and operating profit of $8.1 million. Nowhere near the 2004 margins.

The first quarter of 2006 was not terribly pretty. Revenue was $21.4 million and operating income was $2.8 million. Revenue dropped from the immediate previous quarter and the lovely margins almost disappeared.

Guidance for the next quarter is for $25 to $27 million. That would be a solid improvement over last year. But, investors don't seem to be listening. The stock, which had a 52-week high of $18.54, is now near its low for the period, trading at $11.

And, with the big revenue and margins of 2004 now a thing of the distant past, who can blame the sellers?

ERES 1-yr chart:

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.

Source: eResearch Technology Perfects The Art of Disappointment (ERES)