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Why Plantronics Stock Tumbled Today

By Timothy Green - May 28, 2020 at 1:43PM

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Results were better than expected, but weak guidance doomed the stock.

What happened

Shares of Plantronics (POLY 0.00%) are slumping today, down by 10% as of 12:40 p.m. EDT, after the audio products company reported preliminary results for the fiscal fourth quarter. While Plantronics beat analyst expectations, a steep revenue decline, significant non-cash impairment charges, and weak guidance hobbled the stock.

So what

Plantronics reported fourth-quarter adjusted revenue of $409 million, down 16% year over year but $24.7 million higher than the average analyst estimate. Revenue came in above the guidance range issued by the company in February, driven in part by increased demand for enterprise headsets.

A declining chart superimposed over columns of blue numbers

Image source: Getty Images.

Adjusted earnings per share were $0.30, down from $1.44 in the prior-year period but $0.19 better than analysts were expecting. The adjusted figure excludes two non-cash impairment charges: $180 million related to intangible and tangible assets in the company's voice asset group, and $468 million related to goodwill triggered by the drop in earnings and the sustained decline in the stock price.

"As the world responds to COVID-19, our better-than-anticipated fourth-quarter performance is a result of the team's dedication to delivering for our customers while safeguarding our employees," said interim CEO Robert Hagerty.

Now what

Plantronics expects multiple headwinds to impact its performance in the first fiscal quarter, including factory overhead underutilization due to lower production volumes, higher freight costs due to supply chain disruptions, and factory reconfiguration costs.

Adjusted revenue is expected between $335 million and $370 million, down from $460 million in the prior-year period. Adjusted EPS is expected between a loss of $0.18 and a profit of $0.22, compared to a profit of $1.32 in the same period last year.

With weak guidance and the impairment charges overshadowing a stronger-than-expected fourth quarter, the small-cap stock is now down about 73% from its 52-week high.

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