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Rakon shares hit record low

14 Feb 13

Shares in Rakon crashed to an all-time low overnight, following cuts to the company’s annual earnings guidance.

Declining 24%, stock fell 9 cents to 29 cents, cutting $17m off the company’s market value to $55.4m.

While the dive isn’t exactly a Felix Baumgartner, the alarming plunge has sent the Auckland-based company into overdrive.

Blaming a “sudden and aggressive” price reduction demand for all key component suppliers, the revision of the revision – still following? – follows an earlier revision (there’s that word again) in December.

But Rakon says while a restructuring of the company balance sheet in inevitable, they will not be looking to raise capital.

Cue Techday…why a second review? Why no capital?

The company says bank repayments remain on course and its annual cost reductions of $10m are still intact, but does the sale of assets stretch as far as employees?

Cue Techday…Do the cost reductions mean job losses are likely?

Rakon expects earnings before interest, tax and depreciation to total between $5m-$7m in the 12 months ended March 31, representing a declining forecast from Decembers projections of between $8m-$12m, and $14m-$16m prior.

Cue Techday…What is the outlook for the company given the strengthening dollar? Should Rakon be at the mercy of a strong dollar or should it look at adding value/creating value that rises above currency fluctuations?

We’ve left messages for CEO Brett Robinson, who assures us he will return our calls. When he does, we’ll update you accordingly.