Shares in Tech companies IntraLinks Holdings, Inc. (IL) and Rovi Corporation (ROVI) both lost more than 37 percent in heavy trading after earnings reports showed dreary outlooks, more than outpacing the brutal day throughout the markets.
IntraLinks, a global SaaS provider, released its Q3 earnings report and showed a profit of $764,000 or $0.01 per share. The swing into the black is a marked improvement over last year's third quarter when the company lost $4 million or $0.22 per share. The net income of $0.11 per share managed to beat Wall Street estimates of $54 million or $0.10 per share in revenue.Shares in IntraLinks tumbled sharply regardless of the improvements, losing over 37 percent on the news that they had adjusted their Q4 guidance downward. IntraLinks anticipates Q4 earnings of only $0.13 per share, a full $0.03 lower than the average of analysts polled by Reuters. The lower guidance led Jeffries & Co. and Stifel Nicolaus to both downgrade their ratings on the stock. "Our third quarter results were consistent with our guidance for the period. Our fourth quarter guidance reflects our continued investment in the business and the current macroeconomic environment," said Anthony Plesner, IntraLinks' CFO.
Weak 2012 Outlook Tanks Rovi
Like IntraLinks, Rovi Corporation, a maker of digital entertainment products, managed to beat Wall Street expectations in its earnings, but its shares plummeted nonetheless after the company was forced to adjust its guidance. The company managed to post Q3 revenues of $196.5 million, up from last year's $138 million but just below expectations of $197.9 million. This translated to pro forma profits of $0.63 per share, beating analyst expectations of $0.61 per share. However, Rovi had to adjust its estimates for 2011 revenue to a range of $770 million to $810 million, falling in the lower end of the range in previous estimations. What's more, growth for 2012 is anticipated to be lower as a depressed consumer electronics market and a continued decline in the market for their analogue products. Rovi predicts revenue growth for 2012 in the single digits, well below analyst expectations of 15.5 percent. This led analysts at Collins Stewart, Brean Murray, and Credit Agricole Securities all to downgrade the stock and prompted a sell-off that saw shares in Rovi drop over 38 percent on trading over 17 times its average volume.
Other Tech News
The tech sector also got big news yesterday when Yahoo, Inc. (YHOO), Microsoft Corporation (MSFT), and AOL, Inc. (AOL) announced a partnership to sell each other's ad space in an effort to better compete in a market increasingly dominated by Google, Inc. (GOOG) and Facebook. The agreement, which will go into effect early next year, will allow the companies to sell each other's unsold premium advertising inventory, or display ads, while still remaining in competition with each other. "We're thrilled to partner with Microsoft and AOL and bring to market what we believe will be a more efficient, effective and more effortless way to access true premium inventory and formats," said Ross Levinsohn, executive vice president of Yahoo!Americas. "There has a been a significant shift in how inventory is bought and sold, and we're now 100 percent focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners."
The announcement didn't appear to significantly help shares of the three companies, though, as Yahoo edged up half a percent while Microsoft and AOL both dropped, falling over 3.5 percent each.