Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why ShoreTel, Inc. Shares Sank

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 ShoreTel, (NASDAQ: SHOR  ) plunged more than 11% Friday after the company turned in decent fiscal second-quarter results, but provided lower-than-expected forward revenue guidance.

So what: Quarterly sales rose 13% year over year, to $84.5 million, beating expectations for sales of $83.15 million. That translated to non-GAAP net income of $0.05 per share, compared to a $0.04 per share net loss in the same year-ago period. By contrast, analysts were modeling adjusted earnings of only $0.03 per share.

In addition, ShoreTel projected revenue in the current quarter should arrive in the range of $80 million to $85 million,  the mid-point of which sits below analysts' average expectations for sales of $84.19 million.

Now what: The top-line guidance miss certainly wasn't all that alarming. But it's evident that the market was hoping for a more pronounced turnaround, especially considering shares are still trading for 38 times next year's estimated earnings. In addition, keep in mind that ShoreTel is still unprofitable based on generally accepted accounting principles. As a result, until ShoreTel can both pick up the pace and prove it has what it takes to achieve sustained long-term profitability, I prefer to stay on the sidelines.

Consider the six amazing growth stocks in this free report
If ShoreTel's turnaround doesn't quite whet your investing appetite, you're in luck!

Despite skeptics saying it couldn't be done, co-founder David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market, and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2809141, ~/Articles/ArticleHandler.aspx, 8/28/2015 1:32:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

Today's Market

updated Moments ago Sponsored by:
DOW 16,616.02 -38.75 -0.23%
S&P 500 1,985.03 -2.63 -0.13%
NASD 4,818.90 6.19 0.13%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 1:14 PM
SHOR $7.36 Up +0.14 +1.87%
ShoreTel, Inc. CAPS Rating: ***