UPDATE 1-VisionChina shares tank on weak outlook
March 3 |
March 3 (Reuters) - Shares of VisionChina Media Inc (VISN.O) lost over a third of their value on Wednesday, a day after the digital advertising company forecast disappointing first-quarter revenue, prompting at least one brokerage to downgrade the stock.
"Its first-quarter guidance exhibited a sharp decline quarter-over-quarter. Add in mounting costs, and VisionChina's earnings is diving into negative territory," Susquehanna Financial analyst C. Ming Zhao said in a note to clients.
The analyst downgraded the stock to "negative" from "neutral" and set a price target of $4.50.
The company, which provides digital advertising on mass transportation systems in China, said it expects first-quarter revenue to be no less than $22 million, compared with analysts' expectations of $38.4 million. In January, VisionChina completed its $160 million acquisition of Digital Media Group, China's largest provider of digital advertising on subways.
The company blamed industry competition, restructuring of its sales force and integration of its Digital Media Group acquisition for the limited sales visibility into the first quarter of 2010.
Shares of the China-based company were down 35 percent at $5.30 in morning trade on Nasdaq. (Reporting by Sudipto Ganguly in Bangalore; Editing by Gopakumar Warrier)
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