by Tom Taulli | April 2, 2012 6:30 am
While much of the market did well in the first quarter, there were some implosions. Here’s a look at a few of the notable ones:
It’s the No. 3 stock exchange in the U.S., primarily because of its technology prowess. So the BATS attempted an IPO on its own platform to showcase its strength.
Well, within seconds of the launch of the deal, the computer system went haywire. Trading in the shares of the BATS hit about 4 cents. The malfunction even infected other shares. For example, Apple (NASDAQ:AAPL) plunged by 9%.
BATS CEO Joe Ratterman apologized for the fiasco and said bonuses may be suspended for the year.
The botched deal could fuel another big problem: The Securities and Exchange Commission is investigating high-speed trading companies such as the BATS.
The first-quarter earnings report of Pandora (NYSE:P), an online radio company, showed the perils of the newfangled social media space. On news of the filing, the stock price plunged $14.27, to $10.86.
The earnings report had some good news: Total listening hours came to 2.7 billion, up 99% from the year-ago period. Revenues also spiked by 71%, to $81.3 million.
The problem was that Wall Street expected much more. The consensus estimate was for revenues of $83 million.
Even worse, Pandora provided weak guidance. The estimate for revenues was for $72 million to $75 million for the next quarter. Wall Street was looking for $86.5 million.
A few days before the earnings release, Stifel Nicolaus analyst Jordan Rohan came out with a bullish analysis of Pandora. He gave the company a price target of $18.
Once a sleepy walnut cooperative, Diamond Foods (NASDAQ:DMND) turned into high-flying momentum stock over the past few years. The driving force was the company’s ambitious CEO, Michael Mendes, who engaged in aggressive dealmaking and advertising campaigns, including Superbowl commercials.
Mendes’ crowning transaction was his agreement to shell out $2.35 billion for Procter & Gamble‘s (NYSE:PG) Pringles brand. The buy would have instantly turned Diamond into a snack food giant.
Unfortunately, the company was playing fast and loose with its accounting and had to restate its financials for 2010 and 2011. In one week in February, the stock plunged nearly 40%. Yes, Mendes was pushed out, and his deal for Pringles was nixed. Kellogg (NYSE:K) bought the company instead.
Diamond is currently under investigation by the SEC and the Justice Department.
For the year, Research in Motion‘s (NASDAQ:RIMM) shares are off by 76%. The company has failed to innovate, which allowed rivals such as Apple and Google (NASDAQ:GOOG) to eat into its market share. Some of RIMM’s latest products, including the PlayBook tablet, have been downright embarrassments.
RIMM has also experienced several major outage, which has cast doubt on one of the company’s key differentiators: reliability.
In January, RIMM decided to replace its co-CEOs, Jim Balsillie and Mike Lazaridis. The new leader is Thorsten Heins, who was chief operating officer of products and sales. Heins proclaimed: “I don’t think that there’s a drastic change needed.”
But when RIMM reported its earnings yesterday, he said on the conference call: “I did my own reality check on where the entire company really is. Having had the benefit of going through this process from the vantage point of CEO, it is now very clear to me that substantial change is what RIMM needs.”
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
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