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Wednesday, June 26, 2002
Roxio shares fall on lower guidance...


Shares of CD-burning software maker Roxio Inc. fell 46 percent on Tuesday after the company slashed its quarterly earnings and revenues forecast, citing weak retail sales, particularly in Europe. Roxio's shares fell to $8 in after-hours trade after closing down 2.4 percent at $14.95 on the Nasdaq...

Santa Clara, California-based Roxio cut its fiscal first quarter earnings forecast by 80 percent, saying it now expects earnings per share, excluding noncash charges, of 2 cents. Including charges it expects to report a per-share loss of 15 cents.

Roxio said it sees first quarter revenue of $31 million. The new forecast compared to prior guidance of $35 million in revenue and pro forma earnings per share of 15 cents.

In the past, Roxio, which was spun off last May by Adaptec Inc , had often maintained that even as PC shipments were soft overall, its product sales were growing as more and more computer makers sold PCs with CD-burning software and technology.

"Nothing has changed in our business, but the consumer sector is getting weak and it finally caught up with us," Chris Gorog, Roxio's president and chief executive officer told Reuters after a conference call with analysts.

On the call, Gorog and other company officials said the revenue and earnings shortfall became apparent as they noted in recent weeks a softness in royalties from OEM customers as well as lower revenues from retail sales.

Roxio said the company's results were also largely impacted by weakness in Europe, where retail sales fell 20 percent sequentially.

ANALYSTS NOT SURPRISED

On a conference call with analysts, Gorog said he expects the second quarter earnings and revenues will be flat to the first quarter, but that the company expects substantial growth in the third and fourth quarter over the first and second quarter.

Analysts said the warning was not unexpected.

"There's been a lot of negative announcements by major personal computer OEMs (original equipment manufacturers) and that couldn't have helped Roxio's quarter," said Justin Cable, analyst with B. Riley & Co.

But analysts said the company's software sales have slowed along with the PC market.

"The rate of optical drives bundled with PCs was not enough to offset the slump in the PC market, plus Europe was a particularly weak market," Cable said.

Analysts cited negative announcements from other PC OEM suppliers as well, including Oak Technology Inc.

Last week, Oak Technology, a maker of parts for devices that record onto compact disks, said it expects a loss in the current quarter due to a weak personal computer market.

The Sunnyvale, California-based maker of systems for the optical storage and digital imaging markets also said in a statement it expects revenues for its fiscal fourth quarter, ending June 30, to decline from the third quarter.


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