"Behold the turtle. He only makes progress when he sticks his neck out." --James Bryant Conant
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Internet know-it-all Ask Jeeves (Nasdaq: ASKJ), the provider of a search engine that answers all our questions, issued an earnings warning after the market's close yesterday. The company attributed the shortfall to a slowing economy and reluctance among companies to make additional outlays on online advertisements. What's more, CEO Rob Wrubel also stepped down. The Emeryville, California-based company, expects revenues of $25 million for the fourth quarter about $10 million less than the Street was expecting. Ask Jeeves also expects to post a pro forma net loss of $18 million, or $0.50 per share, well below the Street consensus of a $0.33-per-share loss. In the previous quarter, the company posted a smaller-than-expected loss of $12.6 million, or $0.36 per share. "The broad-based economic slowdown has caused weakness in the online advertising market, advertising pricing pressure, and a decreased sense of urgency among Fortune 1000 companies to implement their online initiatives," President Adam Klein said. "Amongst this and other factors, we have experienced weaker-than-anticipated demand for our solutions, however our relationships with existing customers remain strong." In other news, after more than two years on the job, CEO Rob Wrubel will be stepping down from his board and CEO positions, and assuming the role of executive vice president of market development. (The Motley Fool interviewed Wrubel back in December.) Current board member George Battle will assume the CEO position on an interim basis, while the company looks for a replacement. After becoming a Street favorite, even receiving Motley Fool Daily Double recognition, and hitting its 52-week high of $144, the stock was punished along with the rest of the e-commerce sector at the beginning of the year. The recent shortfall shouldn't come as a complete shock. Advertising makes up a great deal of the company's revenues and, with the dot-com demise, demand for online advertising has diminished. Even Rule Maker Yahoo! (Nasdaq: YHOO) has been hurt this year, in part, over similar concerns. Despite the unfortunate news, the company still remains optimistic. Regarding 2001 revenue and earnings guidance, the company for once wasn't giving all the answers, saying that it was reviewing growth targets. Nevertheless, Ask Jeeves maintains it has enough cash in the "engine" to keep answering questions until reaching expected profitability in the fourth quarter of 2001. Whether that's the case will be the biggest question left for the company to answer. News to Go
Short-term demand issues will hurt Intel's (Nasdaq: INTC) fourth-quarter results, as a major customer recently pulled a big order. But this is one Rule Maker that generates loads of cash and plans to keep growing well beyond this year's tough shopping season. For more on the story, please visit our after-hours take on the news from last night. According to a statement published on the Standard & Poor's website, copyright protection solutions provider Macrovision (Nasdaq: MVSN) will be added to the Standard & Poor's MidCap 400 Index after the market's close on December 8. It will replace energy services holding company LG&E Energy Corp. (NYSE: LGE). Microwave telecommunications products maker California Amplifier (Nasdaq: CAMP) issued a fourth-quarter earnings warning and reported third-quarter results. The company expects earnings of $0.08 or $0.09 per share and revenues between $29 million and $31 million in the fourth quarter. The Street consensus estimate called for the company to earn $0.17 per share. Moreover, California Amplifier also reported third-quarter earnings of $2.29 million, or $0.16 a share, meeting the Streets expectations. Sales climbed to $32.6 million compared to $26.3 million in the same period last year. Computer products seller CDW Computer Centers Inc. (Nasdaq: CDWC) announced in a press release that it expects earnings between $0.40 per share and $0.42 per share in the fourth quarter. That's below the Street consensus expectation of $0.50 per share. The company also expects revenue to be between $990 million and $1.1 billion, representing year-over-year sales growth between 34% and 36%. "Currently, we are facing slower-than-expected demand due to economic uncertainties, which we believe is an industry-wide phenomenon," CEO Michael Krasny said in a statement. "These economic uncertainties make us cautious about 2001, when we believe CDW will continue to increase market share, but grow sales at lower rates than recent quarters." Maker of liquid crystal displays for mobile phones Three-Five Systems Inc. (NYSE: TFS) announced that it expects a fourth-quarter profit between $0.08 and $0.10 per share, well below earlier profit guidance of $0.19 to $0.20 per share. The Street consensus expectation called for the company to earn $0.20 per share. The company also informed investors that it was expecting sales between $36 million and $38 million. It had been expecting $45 million in revenues. Commenting on the coming year, President and CEO Jack L. Saltich remarked, "Our guidance for 2001 remains unchanged. On a relative basis, sequential revenue growth in the first quarter is expected, and that growth should be in the range of 8% to 10%.''
Not long ago, a 23-year-old former employee of Internet Wire produced a phony press release, falsely reporting that the CEO of Emulex (Nasdaq: EMLX) had resigned, the company was restating earnings, and there was a pending investigation by the SEC. The hoax resulted in Emulex shares tumbling nearly 60% in one day. It appears the maker of computer cards that increase data transmission has moved beyond all that, announcing an agreement to acquire closely held computer-networking company Giganet for $645 million in stock. Emulex announced that it would issue about 4 million shares and assumed options for Giganet. The price was based on yesterday's closing price for Emulex shares, $155.75. While not expected to reduce per-share profits for the fiscal year (ending July 1), upon completing the acquisition, the company plans on taking a non-cash charge of $10 million.
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