If one earnings warning is an aberration, does that mean two earnings warnings are a trend? That’s what investors of e-commerce software company Sterling Commerce (NYSE: SE) have to be wondering after the company got pounded on Wall Street on Wednesday.
Sterling Commerce dropped more than 25 percent, falling 9 to 26-3/4, after the company announced that its third-quarter earnings will be 38 to 39 cents per share, less than the First Call consensus estimate of 41 cents. What makes this news doubly disappointing is that Sterling Commerce previously issued a February warning that noted that Y2K could cut into its revenues because clients are spending a lot of their money to fight the millennium bug.
Sterling Commerce was downgraded by analysts five times after the bad news. The downgrades came form Advest Inc, Donaldson Lufkin & Jenrette, Deutsche Banc Alex. Brown, Paine Webber and SG Cowen.