Shares of e-business software company The Descartes Systems Group (Nasdaq: DSGX) were pounded on Thursday, falling more than 25 percent one day after the company warned of lower-than-expected first-quarter revenues. Descartes stock dropped 1-23/32 to 5-1/32 after the company issued the warning and was downgraded from buy to neutral by Merrill Lynch and Piper Jaffray. While other software companies have blamed earnings disappointments on Y2K, Descartes says its problems are simply related to contracts that were expected to close and have now been delayed.
How bad are things? Well, Descartes says it will lose 19 to 22 cents a share in the first quarter. Analysts had expected the company to break even in the quarter. Ouch.
Still, this might be as bad as things can get for the company, whose stock is now at a 52-week low.
“As the value of Descartes’ new e-business supply chain solutions becomes recognized by the market, we have seen a trend toward higher transaction values for our software and consider this a healthy sign in the business,” said Peter Schwartz, chairman and CEO of Descartes. Schwartz added that the company remains optimistic about closing the deals that have been delayed.