Rakon shares tumble 13% as company blames high kiwi for earnings drop
Currency, a weaker telecommunications market and the commidisation of smartphones weigh on the Auckland-based GPS technology maker, once a market darling.
Rakon shares [NZX:RAK] tumbled 13% to 47c after the manufacturer of crystal oscillators used in mobile phones and navigation systems said a high kiwi dollar and weaker demand from the telecommunications industry weighed on full-year earnings.
Earnings before interest, tax, depreciation and amortisation fell 47 percent to $13 million including a share of EBITDA from associates and joint ventures, the Auckland-based company said in a statement. The bottom-line result was a loss of $420,000 in the year ended March 31, from a profit o $8.48 million a year earlier.
Shares of Auckland-based Rakon, a market darling when it first listed in May 2006, fell 7 cents to 47 cents on the NZX today. The shares peaked at $5.80 in May 2007, having sold in the initial public offering a year earlier at $1.60 apiece.
Managing director Brent Robinson said the earnings decline “reflected the impact of the continuing strength” of the New Zealand dollar. In US dollar terms, annual revenue gained 4 percent.
Annual sales fell 6 percent to $178 million, the company said. Revenue from the telecommunications sector was lower than expected, which Rakon put down to deferred spending. Robinson said he expects demand to revive as companies resume investment in infrastructure needed to meet growing demand for data traffic.
Ahead of today's earnings announcement, Deutsche Bank noted Rakon faced challenges beyond currency movements. They included the commoditisation of the smartphone market and associated pressure on margins.
Deutsche Bank has a hold rating on the stock, and a 12-month target of 53c.
Earlier head of private wealth Mark Lister said, "The world was in a different place when they first listed. The technology doesn't stay your own for very long. This has translated into a steer clear approach amongst investors."
BusinessDesk and NBR staff
Fri, 18 May 2012
Fri, 18 May 2012
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Rakon shares tumble 13% as company blames high kiwi for earnings drop
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