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Why LivePerson, Inc. Shares Dropped

By Steve Symington – Feb 13, 2014 at 4:01PM

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Is LivePerson's plunge meaningful or just another movement?

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 LivePerson (LPSN 9.93%) dropped more than 10% during Thursday's intraday trading, then settled to close down around 8.6% after the company turned in solid fourth-quarter results but followed with weaker-than-expected forward guidance.

So what: Quarterly revenue came in at $46.9 million, which translated to adjusted net income of $0.06 per share. Analysts, on average, were looking for earnings of $0.06 per share on sales of $46.75 million.

However, LivePerson expects current quarter of $46.5 million to $47.5 million, with adjusted earnings per share of $0.04 to $0.06. The midpoints of both ranges fell short of expectations for first-quarter earnings of $0.06 per share on sales of $47.4 million.

Finally, LivePerson sees full-year 2014 revenue of $199 million to $204 million, and adjusted net income per share of $0.21 to $0.25. By comparison, analysts were modeling higher net income of $0.26 per share on lower sales of $201.78 million.

Now what: LivePerson's outlook isn't all that far off the mark, but it's clear investors were expecting more with the stock trading around 51 times next year's estimated earnings going into the report. Keeping in mind those estimates are sure to be revised downward after today's report, I'm perfectly happy monitoring LivePerson's progress from the sidelines.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends LivePerson. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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