Spurred by another dance with encouraging news for Greece’s overwhelming debt, U.S. stocks finished the week by hitting record highs. All told, the S&P 500 gained 0.6% on Friday to close at 2,110.30.
It wasn’t a banner day for every stock, however. Take Brocade Communications Systems, Inc. (NASDAQ:BRCD), Iron Mountain Inc. (NYSE:IRM) and Discovery Communications Inc. (NASDAQ:DISCA) for instance. All three posted sizable losses. Here’s why.
Brocade Communications Systems (BRCD)
Most of the time, it’s an earnings miss or an alarming outlook that torpedoes a stock. Not so with Brocade Communications Systems. BRCD stock was off 4% despite the fact that it topped its Q1 earnings estimates. The data storage solutions provider earned 27 cents per share of BRCD stock, versus estimates of only 20 cents. Revenue topped estimates, too.
So what sparked the 4% selloff for BRCD stock? In simplest terms, analysts weren’t impressed. Oppenheimer’s analyst, for instance, suggested that Brocade Communications Systems’ core storage area networking business was as much a liability as it was an asset.
Iron Mountain (IRM)
Business software outfit Iron Mountain didn’t do nearly as well as expected in its fourth fiscal quarter of 2014, and 2015 isn’t looking ay better.
Last quarter, the company earned an operating profit of 25 cents per share of IRM stock. That figure was up nicely from the 21 cents per share Iron Mountain earned in the same quarter a year earlier. But, it fell short of the profit of 31 cents per share the pros were expecting this time around. Q4 revenue of $778 million was also a little shy of forecasts.
The bigger catalyst behind today’s 5.5% drop from IRM stock, however, was the company’s lowered earnings guidance for 2015. Iron Mountain now foresees profits of somewhere between $2.00 and $2.20 per share, down from prior estimates between $2.12 and $2.28 per share.
Discovery Communications (DISCA)
Any good sports coach knows if it’s not broken, don’t try to fix it. In other words, if your team is doing well, don’t mess with the chemistry.
The same is often true of a company … messing with what’s a winning formula is reason for shareholders to be concerned.
Enter Discovery Communications. Though there were a couple of sore spots in its fourth quarter numbers released last night, by and large its results could be considered successful, and encouraging. Revenues missed expectations, but still grew 9%. Its international segment pumped up its critical top line by 17%, and Discovery Communications said it foresees more of the same kind of growth in the foreseeable future.
Then why did DISCA stock tumble at all on Friday, recovering some of what at one point was more than a 5% dip? Partly because The company reported an adjusted profit of 38 cents per share of DISCA stock Thursday evening versus expectations of 45 cents. And also because the CEO that put much of this growth in motion, Eileen O’Neill, is leaving the company, perhaps upsetting a successful team chemistry. Her last day will be May 1st of this year.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
