(Rochester, N.Y.) – PAETEC’s stock continued to plummet Monday, following Friday's announcement that second-quarter earnings would not meet expectations.
Shares closed at $2.73, down 14 percent. On Friday, shares fell 46 percent. The stock hit the 52-week low on Monday of $2.45.
The company predicts sales of $401 million to $406 million. Analysts were expecting sales of $421 million.
“When PAETEC came out and said, ‘We’re wrong. We’re not going to do what we thought we were going to do,’ investors headed for the exits,” said George Conboy of Brighton Securities.
“Our customers appear to be facing notable economic pressures due to the difficult macroeconomic environment, as we have seen softness in minute-sensitive usage, increased pricing pressure during contract renewal, and a modest increase in customer turnover," said PAETEC Chairman and CEO Arunas A. Chesonis in a statement.
Chesonis also said the firm will not be able to meet its projected earnings for 2008. PAETEC plans to releases second-quarter's results after the market closes on Aug. 13.
The Midtown ProjectPAETEC’s financial health is very important to Rochester, as the company plans to build a high-rise headquarters on the site of Midtown Plaza. There are no indications that those plans have changed, however, Conboy said it’s imperative PAETEC rebound from Friday’s losses.
“To borrow money, you have to have credibility. PAETEC lost some credibility with investors on Friday,” Conboy said. “I think there will be a reasonable question from the community to PAETEC, can they go forward with this project? Can they get financing? Will they put up that building? Right now, the jury’s out.”
The state has committed up to $65 million to demolish Midtown and clean up the site. The city has committed $13 million to buy the property, relocate tenants, and plan for the site’s future.
The mayor’s spokesman issued a statement on his behalf, saying, “Let me state unequivocally, there has been nothing that has occurred to date that will derail the project.” The statement said the project is on track.
In the July 25 issue of the Rochester Business Journal, Chesonis said he has made no guarantees to the city about the headquarters. “That's part of the ongoing negotiations. We're probably nine months away from signing documents...I'm not going to commit the company to anything before I see something going on at the site,” Chesonis was quoted as saying.
The citys
Midtown Rising Web site says a "Plan B” for the site will be developed during the planning process, should PAETEC pull out. The Web site says the city has to clean up the site, anyway, in order to attract additional developers.
Midtown closed to the public last week.
