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Why CalAmp Stock Plunged Today

By Steve Symington - Dec 11, 2018 at 2:51PM

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The machine-to-machine communications specialist just lowered its third-quarter outlook. Here's what investors need to know.

What happened

Shares of CalAmp (CAMP 3.44%) were down 16.2% as of 2:15 p.m. EST Tuesday after the machine-to-machine communications company reduced its fiscal third-quarter 2019 guidance.

Yesterday after the market closed, CalAmp told investors it now expects quarterly revenue in the range of $88 million to $89 million, adjusted EBITDA of $10.5 million to $11.5 million, and adjusted earnings per share of $0.23 to $0.25. By comparison, CalAmp's previous guidance (provided in late September) called for revenue of $94 million to $99 million, adjusted EBITDA of $12 million to $16 million, and adjusted net income of $0.29 to $0.35 per share. 

CalAmp headquarters building

Image source: CalAmp.

So what

CalAmp reminded investors that when it provided its old outlook, management detailed plans to accelerate their supply chain diversification program to shift manufacturing to providers with facilities outside of China -- a move made in response to recent trade tensions and tariff concerns between China and the United States.

"During the third quarter, CalAmp experienced various supply disruptions related to this transition, as well as extended lead times driven by component shortages," the company elaborated. "This resulted in inbound product supply delays at quarter end and impacted the company's ability to ship certain products to meet customer demand."

Now what

To be fair, CalAmp added that "management is taking steps to address these operational challenges." And investors can take solace knowing that -- with sustained demand for its products still intact -- CalAmp should emerge a stronger company better equipped to meet that demand going forward. Given its near-term challenges in the meantime, however, it's no surprise to see the stock pulling back today.

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