A slight uptick in unemployment claims and a slight dip in existing home sales weren’t enough to keep the bulls at bay today. The S&P 500’s close of 2,130.82 was 0.23% better than Wednesday’s, though once again the volume behind the effort was tepid, at best.
Thursday wasn’t a winner for all stocks, though. Just ask owners of NetApp Inc. (NASDAQ:NTAP), Open Text Corporation (NASDAQ:OTEX) and Lumber Liquidators Holdings Inc. (NYSE:LL), who watched all three tickers end the day deep in the red. Here’s what happened.
The ongoing migration from large data banks to cloud-based solutions continues to leave NetApp behind. The data-storage solutions provider failed to live up to its fiscal Q4 expectations, sending NTAP shares lower by 10% on Thursday.
When all was said and done, NetApp earned 65 cents per share on $1.54 billion in revenue last quarter. Analysts, however, were expecting a profit of 72 cents per share of NTAP on sales of $1.59 billion. Both the top and bottom lines were below their year-ago comparables.
The real prod for the pullback from NTAP, however, may have been the slew of downgrades that followed the disappointing numbers. JPMorgan, Cantor Fitzgerald and others downgraded NetApp. Though Credit Suisse didn’t downgrade NetApp, the firm’s analysts did say of the storage maker:
“We are becoming concerned that continued mixed execution and ongoing product transitions could be masking structural issues residing in the competitiveness of their offering…We do believe the pace of deceleration is surprising and we note NetApp’s performance suggests share loss…We remain concerned about slow industry growth, competitive share loss, and weak product roadmap.”
Open Text Corporation (OTEX)
The good news: Open Text Corporation CEO Mark J. Barrenechea has fully returned to work after limiting his duties over the past three months to receive treatment for his leukemia. The bad news: His first order of business sent OTEX shares down more than 12% on Thursday.
That order of business was updating the company’s fourth fiscal quarter earnings outlook. Open Text Corporation now believes it will earn between 64 and 72 cents per share of OTEX on revenue somewhere between $440 million and $455 million. Analysts had been expecting a bottom line of 89 cents per share and $488 million in sales. The current-quarter outlook’s numbers are also both lower than year-ago figures.
Like NetApp, Open Text is working to adjust its business model to one that recognizes a preference for cloud-based solutions. That restructuring is making sales and profit growth tough to maintain.
Lumber Liquidators Holdings (LL)
Last but not least — and as if this saga needed any more drama — Lumber Liquidators Holdings CEO Robert Lynch has resigned, apparently effective immediately. Stunned investors sent LL shares down another 16% today, bringing the selloff since scandal began back on February 25th to nearly 70%.
While no specific reason was cited for Lynch’s sudden exit, it’s no secret that the Department of Justice is mulling criminal charges for using illegally-sourced flooring materials. Meanwhile, threats of civil lawsuits against Lumber Liquidators continue to pile up.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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