Shares of Smart Modular Technologies Inc. dropped to their lowest price in a year Friday after the maker of memory chips and modules issued a profit forecast that disappointed investors, and the broader market slumped.
Smart Modular shares fell 53 cents, or 10.5 percent, to $4.50 in midday trading as the overall market slumped. Earlier, the stock traded as low as $4.44.
Late Thursday, Smart Modular posted a fiscal third-quarter loss and forecast per-share earnings of 6 cents to 7 cents for the fourth quarter ending in August. Analysts, on average, expect a profit of 10 cents per share for the quarter, according to a poll by Thomson Financial.
Thomas Weisel Partners analyst Doug Reid called the company's forecast "weak," and said it was below Wall Street's expectations and his own estimate of 11 cents per share.
Reid, who rates the stock "Market Weight," lowered his profit estimate to 6 cents per share for the quarter. He cited the disappointing guidance and weak demand for the company's products.
The analyst kept his sales estimate at $165 million, which is the midpoint of Smart Modular's own sales forecast.
Smart Modular President and Chief Executive Iain MacKenzie said Thursday the quarter's results were hurt by a difficult pricing environment in the DRAM industry. DRAM chips are most common type of memory chip used in personal computers. This led to the loss of sales of certain types of memory modules to some semiconductor companies.
However, MacKenzie added that the company is "positioned well for the long term due to our leadership position in the high end, high value memory module business, a recovery of the DRAM market, and continued traction in our non-DRAM business."
Terms & Conditions
RSS Headlines
Fool UK