Boston, MA 03/14/2014 (wallstreetpr) – XO Group Inc (NYSE:XOXO) took a steep dip by over 15% in today’s trading session as the women’s media and technology company fumbled in its fourth quarter performance.
What went wrong?
The company missed the market estimates in both its revenue and EPS numbers. The earnings per share for the fourth quarter came in at 2 cents per share, missing the market expectation widely by 9 cents per share.The earnings per share, exclusive of the costs, stood at $0.35 for the full year. Similarly, revenues too missed the mark by $1.33 million as it was posted at $32.6 million, higher 1.3% from the previous year’s quarter. For the full year 2013, the revenue growth was recorded at the rate of 3.6$ year-over-year. The company noted that a series of incremental expenses affected the earnings per share of the company.
The large amount of pressure built over the company’s financial performance was on account of its excessive costs during the quarter. An impairment charge of nearly $1.4 million related to certain trade names, primarily The Wedding Channel trade name accounted for in the first quarter. Secondly, another $1.8 million worth of impairment charge was taken into books, which relates to equity investment of 2012. Moreover, its G&A expenses also increased at the rate of 31% in the fourth quarter itself due to depreciation related to new software and hardware product launches as well as purchases.
The company also announced that it has appointed Michael Steib to assume the role CEO, while it is reported that the Co-Founder David Liu will continue to guide the company’s overall direction as Chairman of the board.
What to expect?
During the company’s earnings conference call, it said that it anticipates revenue growth rates will be in similar lines with the previous five years. Moreover, it added that the company “remains cognizant” that it will take time for it to record cumulative momentum of its efforts to depict in more substantial year-over-year growth rates.
It noted that the China business remains to be in an investment phase, but has a long-term potential. Therefore, the company intends to continue to allocate resources towards this business at a same rate at which it had done in the year 2013.
Following uninspiring results announced by the company, analyst firm B. Riley was quick to downgrade the company from ‘Buy’ to ‘Neutral and has also revised the price target from $15 to $10 now.
