Liberate warns, stock drops

By Susan Rush
From The August 29, 2002 Edition Of CED Broadband Direct

Liberate Technologies' shares were shedding 15 percent of their value in morning trading, following news that the interactive TV platform provider has lowered its first quarter outlook.

In response to current market conditions and lowered demand in the cable and telecom markets for its software, Liberate expects to fall short of its previous first quarter revenue guidance of between $20 million and $22 million. The company forecast Q1 revenue of between $12 million and $14 million.

Its pro forma basic net loss also is expected to be wider than forecast. Liberate is predicting a loss in the range of 12 cents to 19 cents a share. Earlier guidance was calling for a net loss of between 6 cents and 8 cents a share.

Although specifics were not outlined, Liberate says it plans to further streamline its operations to help bring expenses in line with demand. The company expects to take a restructuring charge of between $2 million and $3 million in the first quarter. A "significant" cost savings will be felt beginning in the second quarter, Liberate says.

Looking ahead to the second quarter, Liberate is predicting revenue will fall in the range of $17 million to $19 million. If this forecast becomes a reality, it will fall short of analysts' consensus revenue estimates of $22 million, according to Thomson First Call.

Liberate expects to achieve pro forma profitability in the second half of its fiscal 2003, which ends May 31, 2003.

As of 12:07 p.m. EDT, Liberate shares were off 24 cents, trading at $1.87 and teetering near their 52-week low of $1.80.