Why LogMeIn Shares Got Rejected

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of remote-access software specialist LogMeIn (NASDAQ: LOGM  ) plummeted 28% today after its current-quarter guidance disappointed Wall Street.

So what: LogMeIn's fourth-quarter results managed to top estimates -- EPS of $0.24 on revenue of $37 million versus the consensus of $0.18 and $36.7 million -- but downbeat first-quarter guidance is forcing analysts to recalibrate their growth expectations. Management blamed the miss largely on a higher tax rate, but analysts are more concerned that the revenue slowdown in its Customer Care and RMM segments suggest intensifying competitive pressure.

Now what: Management now sees first-quarter adjusted EPS of $0.09-$0.10 on revenue of $36 million-$36.5 million, well below the consensus of $0.18 and $38.2 million. "We plan to increase our investment in our Access and Collaboration cloud services this year to better capitalize on growing demand in this multi-billion dollar market," CEO Michael Simon said. "And we believe the recent introduction of Cubby -- our latest addition to our Access and Collaboration product group -- gives LogMeIn a compelling and complementary suite of cloud services for today's mobile workplace." But while it might be tempting to bet on the stock for a short-term bounce, LogMeIn's speculative nature continues to make it a questionable long-term opportunity.

Interested in more info on LogMeIn? Add it to your watchlist.

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