Ouch! On Tuesday, Nautilus
In its most recent quarter, the company lost $0.30 a share. This excludes a $0.34 one-time gain from settling litigation, which has nothing to do with selling fitness equipment. It shouldn't surprise Fools that the company was hardly expected to shoot the lights out with its results. Analysts predicted $0.04 per share in earnings, a penny below what Nautilus earned last year. I've counted four Wall Street analysts who've lowered their ratings based on expectations of a weak second half. Where was this brilliant lot before this quarter's results?
Apparently, the company blackballs analysts who write unfavorable comments. Eric Wold, an analyst at Merriman Curhan Ford & Co., alleges that he's been virtually cut off for putting a sell recommendation on the company's shares. Perhaps if the company were more concerned with improving its operating performance, the results wouldn't have caved, and its stock price wouldn't have fallen from the $40s to its current $10.
Nautilus blamed the results on a weaker consumer environment, which affected sales of home equipment. I'm not so sure. When buying an expensive piece of equipment -- for example, at least $1,000 for a home gym -- an extra few dollars for gas a week really won't affect the decision. Rival Cybex International
Despite having well-known brands such as Nautilus, Bowflex, and StairMaster, management spent $68.6 million to purchase Pearl Izumi, which makes cycling and running apparel. The money would've been better spent reinvesting in improving its core equipment business, rather than adding a peripheral one.
Fools seeking a quick business turnaround probably won't find it here. As management itself admits, the second half of the year is looking weak. Alas, a few shares of Nautilus won't pump up your portfolio -- this stock is definitely a lightweight.
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Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. Feel free to e-mail him. He doesn't have any positions in the companies mentioned.