Zebra Technologies, a maker of enterprise systems for tracking and managing inventory and assets, on Tuesday missed Wall Street's targets for the third quarter. It also guided lower for the current quarter, citing weakening demand. ZBRA stock plunged on the news.
The Lincolnshire, Ill.-based company earned an adjusted $4.12 a share on sales of $1.38 billion in the September quarter. Analysts polled by FactSet expected Zebra earnings of $4.53 a share on sales of $1.48 billion. On a year-over-year basis, Zebra earnings declined 9% while sales dropped 4%.
For the current quarter, Zebra forecast adjusted earnings of $4.50 to $4.80 a share. The midpoint of $4.65 is below Wall Street's target of $5.15. It also predicted sales would decline a fraction to $1.46 billion, based on the midpoint of its guidance. Analysts had been expecting sales to rise 5% to $1.54 billion in the fourth quarter.
"We are recovering from supply chain challenges related to persistent component shortages and the transition to our new North American distribution center," Chief Executive Anders Gustafsson said in a news release. "These challenges, along with certain large customer projects being deferred, impacted product shipments exiting the quarter, resulting in lower-than-expected sales and profitability."
ZBRA Stock Skids After Report
He added, "Customer demand and our order pipeline generally remain solid, yet we have been seeing softening demand and elongated sales cycles since late in the third quarter."
On the stock market today, ZBRA stock plummeted 15.9% to 238.30.
Zebra makes rugged mobile computers, bar code scanners and printers, and RFID tracking tags that link to enterprise systems to enable real-time visibility of inventory and other assets. It offers systems for retail, e-commerce, health care, manufacturing, transportation and other industries.
"Despite the near-term challenges, we are well positioned to benefit from the trends to digitize and automate workflows," Chief Financial Officer Nathan Winters told IBD. Zebra still has a healthy backlog of orders and is seeing good demand from small and midsize businesses, he said.
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