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Drecom revises earnings (downwards of course) April 11, 2007

Posted by fukumimi in Economy & Business, IT, Japan.

Drecom, which had one of the big IPOs last year (back in February, with the market cap exceeding JPY100B at one point), announced it is revising its full year(closing end of March) sales and earnings figures downwards. Sales down 42% from a projected JPY1.5B ($12.5M) to JPY870M, with ordinary profits down JPY400M to a loss of JPY180M.

Shares were down nearly 10% on the day closing at JPY689,000.

That still values the company at JPY13.7B ($114M).

The interesting thing is that Drecom had released its 3Q earnings just two months ago. Full year guidance was unchanged, even though cumulative sales for the year were just JPY602M for Q1~3 against a target of JPY1.5B.

Two months later, they revise sales forecasts down 42%. Surely some heads should roll. (If I were a betting man, I’d bet against anyone actually taking responsibility though….)

I wonder if the logic was that the Q4 spike last year was going to be repeated this year. It would be interesting to see if they had a pipeline to justify such reasoning, or if it was just wishful thinking. I’d bet on the latter, if I was a betting man.


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