Tessco expects profits to fall short

Stock declines 22% as local telcom firm lowers its forecasts

March 10, 2001|By Andrew Ratner | Andrew Ratner,SUN STAFF

Shares of Tessco Technologies Inc. fell 22 percent yesterday after the Hunt Valley telecommunications equipment maker lowered its expectations for its fourth quarter and fiscal year, which end April 1.

Tessco shares fell $3.63, to close at $12.88 on the Nasdaq stock market yesterday.

The company blamed its lower expectations on reduced demand for wireless telecommunications products, excess inventories and an overall tightening of capital investments in an anxious economy.

It expects revenue growth of about 5 percent for the 2001 fiscal fourth quarter compared with a year ago, with earnings per share in the break-even to 5-cent range.

In January, it projected fiscal fourth quarter revenue growth of 35 percent and earnings per share in the 33-cent to 36-cent range.

For fiscal year 2001, Tessco now expects revenue of about $258 million, up 31 percent from fiscal 2000. Earnings per share are expected in the range of $1.07 to $1.12, compared with $1.20 for fiscal 2000. That's down about 25 percent from the company's earlier projections of 40 percent revenue growth for 2001 and earnings per share of $1.40 to $1.43.

"This year, we have yet to see any seasonal boost as our customers delay network infrastructure projects," said Robert B. Barnhill Jr, chairman and chief executive officer of the 18-year-old company, in a statement. "Recent announcements by numerous companies suggest to us that the softness we are experiencing could last through our next quarter as well."

"I don't think it's entirely surprising," said William W. Benton, an analyst who follows Tessco for William Blair & Co. LLC. "It's the nature of the slowing end-market demand right now."

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