Shares of Synchronoss Technologies plunged to a 52-week low on Tuesday, a day after the phone billing technology company said business from its biggest client, AT&T, was flat. The company also cut its full-year forecast for business with the phone carrier.
Synchronoss, a provider of subscriber activation and other services for wireless companies, said Monday that its first-quarter earnings rose to 14 cents per share from 4 cents per share. Adjusted earnings were 26 cents per share. Quarterly revenue increased to $64.6 million from $52.9 million.
Synchronoss said that AT&T-related business made up about $32.6 million of its adjusted revenue, however, which was basically flat compared with the fourth quarter. AT&T makes up 50 percent of the company's total revenue.
Synchronoss now expects AT&T revenue to increase 5 percent to 10 percent in 2012. It previously predicted a low double-digit increase, according to analysts.
Synchronoss also announced in its conference call that it expects second-quarter earnings of 26 to 27 cents per share on revenue of $65 million to $68 million. For the full year, the company still predicts earnings of $1.07 to $1.11 per share. That is in line with most Wall Street predictions.
R.W. Baird's William Power said that the quarter was solid, but that the reduced AT&T guidance was troubling to many. The analyst said that the new outlook is "being driven by a decision to add additional voice automation functionality to a new channel, which is delaying transactions near term, but could increase the long-term opportunity."
Power maintained an "Outperform" rating, but cut the company's price target to $37 from $44.
Scott Sutherland of Wedbush said that even though AT&T is now predicted to grow at a slower pace, Synchronoss is expanding its relationships with Verizon and Vodafone, which is a good sign.
The analyst said the company is still a good growth story and that investors should take advantage of weakness in the stock. Sutherland kept an "Outperform" rating and lowered its price target to $40 from $42.
SHARE ACTION: Shares of Synchronoss Technologies Inc. slid $6.24, or 22 percent, to $22.10 in midday trading. The stock fell to a fresh 52-week low of $20.74 earlier in the session. The shares are down 8 percent for the year to date.