Rakon shares plunge on profit warning

CLAIRE ROGERS
Last updated 10:32 13/02/2013
RAK 0.200 0.00 0.00%
RAK

Click for a detailed chart

Relevant offers

Industries

Mediaworks radio head Wendy Palmer to leave broadcaster Brad Markham: Palm kernel affects milk - and farmers need to reduce reliance on it Chart of the day: How many plumbers will there be in Auckland? Dam consent but no water for Canterbury deer park Facebook will always be free but it has a massive asset: Us Rupert Murdoch cashes in US$125 million of Theranos stock for US$1 TVNZ content director resigns before restructure Commerce Commission calls time on beIN sports complaint Electricity distributor Network Tasman dips 'toes in the water' of new technologies Chinese Premier Li rejects steel dumping claim, cites larger NZ dairy exports

Hi-tech NZX-listed manufacturer Rakon has again taken the knife to its annual earnings forecast, after aggressive price reductions in one of its key markets.

The company now says its earnings before interest, tax, depreciation and amortisation for the year ending March 31 will be between $5 million and $7m - instead of the $8m-$12m forecast in December.

That December forecast was itself another significant earnings downgrade. The company had previously put earnings for the year at between $14m-$16m.

The company makes crystal oscillators for improving the precision of wireless signals, including in devices such as smartphones.

In a statement released to the NZX, Rakon said the latest earnings downgrade was a result of "sudden and aggressive price reductions demanded of all key component suppliers" in the smart wireless device market.

The company said its directors were "very disappointed", but wished to emphasise that it was on track to make cost reductions of $10m per annum, $7m of which would take effect by April.

Part of those cost reductions involved cutting about 60 New Zealand jobs and moving more manufacturing offshore.

Rakon said it was compliant with its bank covenants, and would take action to ensure its already-strong balance sheet "is properly aligned to a future for Rakon that allows the company to profit from its strengths".

As of the end of September, Rakon had net assets of $189m, and net tangible assets of 80 cents per share.

Rakon shares fell to 29c, a drop of 24 per cent - or 9 cents - today.

Ad Feedback

- BusinessDay.co.nz

Comments

Special offers

Featured Promotions

Sponsored Content