Rofin-Sinar Earnings Soar, Expectations Plunge

Rofin-Sinar Earnings Soar, Expectations Plunge

Shares of Plymouth, Mich.-based Rofin-Sinar Technologies plunged 8.5% in Thursday trading, despite the company releasing earnings that far exceeded expectations.

Rofin's reported $0.35 per share in diluted earnings exceeded the expected $0.30 profit handily, while revenues for the quarter, $147.6 million, similarly trounced expectations of only $138.7 million.

Rofin's problem, however, wasn't with what it accomplished in its final fiscal fourth quarter of 2013, but with its prediction of the difficulties it will face in the now-current fiscal first quarter of 2014. As management noted: "This quarter was also marked by a lower level of order entry across all geographical regions. August and September order entry was below expectations, mainly due to a lack of bigger volume orders from China and less orders from the medical device industry in North America."

Orders received in the quarter were down 10% year over year, resulting in a weak book-to-bill ratio of only 0.84 for the quarter, and 0.95 for the year. Accordingly, it seems all but certain that next year's revenues will be weaker than this year's.

Indeed, forecasting results for the current quarter, Rofin warned that, in the best possible scenario it expects to record only $127 million in revenues, and earn, at most, $0.08 per share thereon. Both numbers fell far short of consensus expectations ($0.35 per share earned on $143 million in revenues) -- causing an immediate sell-0ff of Rofin-Sinar shares.

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