Stock Watch: New Focus Hurts Troy Group

Troy Group, Inc. (Nasdaq: TROY) fell 2 3/4 to 10 Friday after announcing a new business plan that is expected to hurt results in the near term.

The Santa Ana, California-based Troy Group said it plans to focus on e-commerce payment systems and wireless connectivity products. “Exciting new e-commerce and Internet connectivity opportunities are revolutionizing commerce and communications,” said Chairman and Chief Executive Officer Patrick J. Dirk. “While the current window of opportunity is open, we must invest in these two areas.”

The company said it will make “significant investments in sales and marketing” to focus on those higher-margin areas. The plan is likely to put revenue for the second quarter ending May 31st at $11 million to $12 million, with breakeven earnings. For the year, revenue will be about $55 million to $60 million, with “minimal profitability,” Troy Group said. The company plans to invest more than $7 million during the next fiscal year.

Adding to Troy Group’s woes on Friday was a reported downgrade by Pennsylvania Merchant Group, Inc. to long-term buy from buy.

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