BearingPoint's Big Miss Generates Downgrade, Stock Slide

by: Eric Savitz posted on: May 13, 2008 | about stocks: BE

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Bearing Point (BE) shares are sharply lower this morning on weak financial performance, a change at CFO and a downgrade from Citigroup’s Patrick Burton.

For Q1, the company posted revenue of $830 million, well short of the Street consensus of $854.1 million. Bearing Point lost 10 cents a share, a penny worse than expectations.

For the full year, Bearing Point sees revenues flat with last year; that is consistent with the Street view for revenue of $3.44 billion, versus $3.46 billion a year earlier. The company had previously said revenues would be “flat or slightly increasing.” The company sees a loss for the year of $70 million, which would be 27 cents a share, in line with the Street. Previously, the company had forecast a range between a loss of $70 million to a profit of $1 million. The company now sees free cash flow of $30 million; the old guidance was for a range of $30 million to $100 million.

The company tried to dress up the quarter in its release, noting that it had an operating profit for the first time in seven quarters, and the smallest net loss in nearly two years, with bookings “amongst the highest they’ve been in seven quarters.”

Bearing Point also announced that it has named Eileen Kamerick as CFO, replacing Judy Ethell. The company gave no reason for the shift. Kamerick had been CFO at Heidrick & Struggles (HSII).

Citigroup’s Burton today cut his rating on the stock to Hold from Buy; his price target drops to $2.25 from $3.20. Burton says that cyclical slowing in key vertical markets, as well as a rebound in the dollar, could stretch out the company’s turnaround. “That management lowered its own guidance so early into the year also gives us pause,” he writes.

BE today is down 29 cents, or 15.6%, at $1.57.

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