This article originally appeared as part of ongoing coverage in our premium Motley Fool Rule Breakers service ... we hope you enjoy this complimentary peek!
Shares of LeapFrog Enterprises (NYSE:LF) dropped more than 30% Friday after the company provided disappointing preliminary fiscal third-quarter results.
Why it's happening
Quarterly revenue will be around $145 million, compared to LeapFrog's previous guidance of $220 million to $240 million. As a result, LeapFrog will turn in a net loss of roughly $124 million, which includes approximate noncash charges of $20 million for goodwill impairment and $87 million for deferred tax asset valuation allowance. Net loss per share will be around $1.77, compared to prior guidance for net income per share in the range of $0.16 to $0.28.
Analysts, on average, were expecting net income of $0.19 per share on sales of $226 million.
LeapFrog CEO John Barbour didn't sugarcoat it, saying, "We are very disappointed that our performance in the third quarter was significantly below our expectations and that we will not achieve our fiscal year guidance." Chief Financial Officer Ray Arthur went on to explain they also expect net sales to decline in the current quarter, though they "cannot provide a sales estimate at this time as we continue to evaluate our retail inventory levels coming out of the holidays." As a result, LeapFrog also withdrew its prior guidance for the current fiscal year ended March 31, 2015.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends LeapFrog Enterprises. The Motley Fool owns shares of LeapFrog Enterprises. Try any of our Foolish newsletter services free for 30 days. 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.
More from The Motley Fool
No Holiday Reprieve for 2 of the Biggest Retail Train Wrecks
Most department store chains have posted surprisingly strong results for the 2017 holiday season. However, these perennial laggards couldn't capitalize on the uptick in consumer spending.
3 Stocks That Could Put Amazon's Returns to Shame
These three tickers could be better bets than Amazon for new investors right now.
Will This iPhone Supplier’s Terrific Run Continue in 2018?
Lumentum's growing momentum in 3D sensing could help it overcome the weakness in the telecom segment.