Shares of Zoran (ZRAN) are down $1.51, or almost 20%, at $6.05, continuing to come under pressure following last night’s warning that Q4 revenue will come in well short of consensus estimates because of the loss of business with one of its digital television manufacturer customers.
What can you say after the outlook misses by a country mile?
John Vinh, Collins Stewart: Maintains a Hold rating on the stock, arguing the “floor” for the stock’s valuation is at $5. He cut his 2010 non-GAAP EPS estimate to a loss of 51 cents per share from a prior 23-cent estimate. The company has work to do in cutting expenses further and may need to jettison unprofitable lines of business, such as DVD components.
Betsy Van Hees, Wedbush Securities: Cut her rating to Underperform from Neutral, and slice her price target to $6 from $8. She expects problems in the digital television business and the DVD business will continue. Moreover, Zoran’s attempt to return to profit will hamper its ability to integrate Microtune, which the company announced in September it would acquire for set-top box and cable modem expertise. Her year EPS forecast goes to a net loss of 55 cents from a prior forecast of negative 25 cents.
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