Why Vocus Shares Blurred

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Vocus have plunged 15% today after the company's forward guidance failed to impress the Street.

So what: Vocus reported its earnings last evening, and both the $46.6 million top line and the $0.01 earnings per share result were better than Wall Street's consensus, which sought a $45.3 million revenue number and a $0.02 loss per share. However, third-quarter guidance of $46.5 million to $46.8 million on the top line is below the $47 million consensus, and a $0.03 to $0.04 EPS result is roughly in line with the $0.03 consensus. Additionally, the full fiscal year's guidance of $188 million to $189 million is roughly in line with the $188.2 million consensus.

Now what: The lack of evident growth between the third and fourth quarters could be disappointing, but it's tough to see how merely meeting expectations would warrant a double-digit plunge. However, Vocus execs noted in their earnings call that there were fewer subscriptions in the second quarter as the company moved to a higher average pricing scheme and away from small business services in their marketing segment. This was meant to reduce churn and raise margins, but investors might have decided to stay on the sidelines until the results of this new strategy become more apparent. Long-term shareholders have already lost two-thirds of their investment over the last five years, so it's not as if they aren't used to such uncertainty by now.

Want more news and updates? Add Vocus to your watchlist now.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

The article Why Vocus Shares Blurred originally appeared on Fool.com.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading