At first on Friday morning, it appeared that the stock market would continue higher, riding momentum from yesterday's solid gains and trying to build up some more upward momentum after a sluggish beginning to 2014. But an early rise gave way to nervousness going into the weekend, and major market benchmarks finished the day modestly lower. For Symantec (GEN -0.55%), Geospace Technologies (GEOS 0.31%), and Rally Software Development (NYSE: RALY), however, Friday was a lot crueler, with dramatic drops in all three stocks.
Symantec fell 13% after the maker of antivirus software decided last night to fire its CEO less than two years after he took the position. With the company saying that it expects revenue to drop 8% during the current quarter, Symantec clearly hadn't been able to execute a successful turnaround yet, and the board of directors decided that Steve Bennett wouldn't be the leader to get the job done. Still, it's hard to blame Bennett for the industrywide slump in PC sales, which has taken away one of the biggest sources of growth for Symantec and its typically bundled security-software offerings. With several downgrades following the move, investors can't be certain how Symantec plans to reawaken its potential, especially because other major executives have left the company recently.
Geospace sank 15% after the maker of equipment to help energy companies collect and analyze seismic data disclosed a possible delay of a major order. Geospace said that it had previously announced a $29.4 million order from Seafloor Geophysical Solutions covering 2,300 stations in its OBX ocean-bottom recorder node, and it expected to deliver on that order during its June quarter. But Seafloor Geophysical told Geospace that its financing for the order had fallen through, and that it would look for new investors to help raise capital to make the purchase. Geospace remains hopeful that the sale will eventually take place; it might not happen as scheduled, and the company said it couldn't estimate when delivery would finally occur. For a small company, losing this major order would be a substantial hit, explaining the stock's drop.
Rally Software dropped almost 10% after the cloud-based software developer gave disappointing guidance for the current quarter and fiscal year in its quarterly results last night. Sales rose 27% from year-ago levels, and the company pointed to substantial growth in its enterprise customer base, which includes Chipotle Mexican Grill (CMG 0.62%), Whole Foods Market (WFM), and a host of other major corporations that would generally point the way to faster sales gains ahead. Yet, investors weren't impressed by Rally's outlook for 21% to 22% sales growth in the current quarter, and even a slightly faster 23% to 26% growth rate for full-year fiscal 2015 revenue left investors wanting more, especially given extensive net losses even after adjusting for various measures. Rally is in a hot industry, but it has to keep growing quickly in order to satisfy its shareholders.