GUITAR CENTER HITS SLIDE; NEWS OF SLOW SALES STRIKES SOUR CHORD.Byline: Ben Sullivan Daily News Staff Writer Shares in musical instruments retailer Guitar Center Inc. plummeted Friday after the company said slowing sales and a recent merger will hurt near-term earnings more than expected. Guitar Center stock dropped $4.125, or 27.4 percent, to close at $10.9375. More than 4.5 million shares in the company traded hands, about 12 times the issue's 30-day average trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. . In its unexpected announcement, Guitar Center warned that a recent merger with Musician's Friend ''' Musician's Friend is America's largest direct response retailer of musical instruments and related gear. Musician's Friend was founded in 1983 by Robert and Deanna Eastman, eventually relocating its headquarters from San Diego to a dairy barn in Southern Oregon. , the nation's top musical instrument catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. retailer, and slowed sales of key product lines will cut the firm's second-quarter earnings by about 8 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . The company had been expected to earn 19 cents per share by a consensus of analysts surveyed by First Call Corp. Further, the revenue shortfall will have a drain on the stock of about 10 cents per share for the remaining three quarters of 1999 collectively, Guitar Center said. Guitar Center had been expected to make 80 cents per share in those quarters combined. ``It's pretty disappointing,'' said Bank Boston analyst Sara Gragg in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . Gragg noted that Guitar Center had earlier warned of some dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. to earnings but nothing so dramatic. In May, Guitar Center announced it would purchase Musician's Friend for $48.3 million in an effort to establish a strong catalog and online commerce presence. The Oregon mail-order company also operates one of the Internet's most successful retail musical instrument sites, generating about $9 million in online sales last year. Gragg, whose firm has a ``long-term attractive'' rating on Guitar Center stock, said management of the music retailer will now have to prove it can master the new catalog and online business models before regaining investor confidence. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion