1. 1. 3 Tech Stocks That Crashed This Week
2. 2. These 3 tech stocks fell this week Source: Wikimedia Commons.
3. 3. Lexmark plunged as much as 23% on Tuesday, following a mixed earnings report with weak next- quarter guidance.
4. 4. Tale of the tape Worse, forward earnings guidance for the next quarter was set at just $0.55 per share. Analysts were looking for $0.82 per share. In the second quarter, Lexmark beat Wall Street's earnings targets with $0.97 per share versus estimates of $0.82 per share -- but missed revenue estimates by a hair. Image source: Lexmark. !?&!!!
5. 5. Shifting gears Lexmark is knee-deep in a strategy makeover. The company recently bought enterprise software maker Kofax for $1 billion, instantly doubling its own software revenues. So Lexmark has a brand new business software department and intends to focus on growth there.
6. 6. What's next? In spite of the weak third-quarter guidance, Lexmark's management held its full-year earnings targets steady. In other words, the fourth quarter might -- dare I say should? -- make up for a soft third quarter. Lexmark rarely misses its own guidance figures. If management is on target again, the company and the stock should bounce back at the end of the year.
7. 7. Solar power expert SunEdison kept falling all week long, starting with a sudden flurry of merger announcements.
8. 8. Whats going on? On Monday, SunEdison said it would buy solar systems builder Vivint Solar for $2.2 billion. At the same time, TerraForm Power will pick up SunEdison's rooftop solar operations for $922 million. But wait -- there's more! SunEdison also grabbed British solar installation operator Mark Group for an undisclosed sum.
9. 9. Battle of the analyst bands Northland Capital Markets immediately raised its target prices on SunEdison from $39 to $42, as the mergers addressed "previous weakness" in the company's strategy. But Baird downgraded the stock to a "hold" rating with a $35 price target, because the multiple mergers will be a temporary drag. Both theories can be correct, you know. Northland is taking the long view while Baird focuses on short-term effects.
10. 10. Finally, regional telecom Frontier Communications took a long, slow 12% dive.
11. 11. What's wrong? Frontier didn't exactly do anything terribly wrong this week, nor did analysts attack the stock. Instead, investors largely reacted to happenings elsewhere in the telecom industry. First and foremost, Verizon missed second-quarter revenue targets on Tuesday, triggering a 4% drop in Frontier's shares. This actually makes sense: When Frontier closes its buyout of Verizon's wireline operations in Texas, Florida, and California, the company inherits some of Verizon's worst- performing operations.
12. 12. Loose lips sink ships Other dark moments in Frontier's difficult week included a 4.8% drop on Friday, when Frontier chairwoman Maggie Wilderotter hit CNBC's Squawk Box for a live interview. In that televised segment, Wilderotter said that cable bundles are losing their mojo, forcing cable and telecom businesses to try new business ideas. That was tantamount to admitting that things must change at Frontier as well. Investors hate change and uncertainty.
13. 13. What's next for Frontier? All told, Frontier shares are down 32% so far in 2015. The company reports second-quarter results on August 3, essentially closing the earnings season for telecoms and cable stocks. By then, and particularly after Frontier's own report, we'll know much more about where the company is going next. For now, Wilderotter's comments made the company look nervous about the TV business, which accounts for roughly 17% of Frontier's consumer subscriptions today.
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