NEW YORK (AP) — Velti shares tumbled to the lowest level in more than three years on Wednesday, as the mobile marketing company offered disappointing revenue forecasts for the first quarter and full year along with fourth-quarter results that were below analysts' estimates.
THE SPARK: On Tuesday Velti PLC said it expects 2013 will be a transitional year as it trims its business in some parts of the world. Velti said in November that it will sell some of its businesses in countries with weak economies, like Greece.
The company reported a fourth-quarter adjusted loss of 39 cents per share on revenue of $97.5 million. Analysts surveyed by FactSet expected a profit of 58 cents per share on revenue of $106.9 million.
Velti forecast revenue of $40 million to $44 million for its first quarter and $255 million to $280 million for the full year. Analysts expected $64.7 million and $339.3 million, respectively.
THE ANALYSIS: Jefferies' Peter Misek lowered Velti to "Hold" from "Buy" and slashed his price target to $2.15 from $8. In a client note, the analyst said that the company badly missed with its fourth-quarter performance.
Misek also said that he sees "going concern" issues, since there are liquidity issues in part because Velti has violated its debt covenants.
Richard Fetyko of Janney Capital Markets said that Velti continues to drop customers that were slow to pay for its services or perhaps weren't paying at all. That, coupled with some assets sales in southern Europe and the purging of other low-quality contracts, makes it difficult to determine what revenue is actually coming from paying clients, he said.
The company is also dealing with a dwindling cash position, with Fetyko noting that it had about $56 million in cash and $47million in debt early in the first quarter.
The analyst kept a "Neutral" rating and cut Velti's price target to $3 from $5.
SHARE ACTION: Velti dropped 75 cents, or 24.1 percent, to $2.36 in afternoon trading. The stock was down to $2.08 earlier in the session, the lowest point since 2009.