Shares in Melbourne IT have sunk to a nine-month low after it downgraded its earnings guidance and flagged the sale of some assets.
In a trading update on Monday, the domain name manager and online services provider warned its earnings before interest and tax (EBIT) for 2012 would be 10 per cent lower than in 2011.
The warning was sparked by ongoing volatility in Melbourne IT’s For The Record (FTR) division, which provides digital recording services for venues such as courtrooms.
FTR had been impacted by US federal and state government decisions to reduce or postpone spending.
‘‘Melbourne IT is experiencing disappointing trading results and a number of new opportunities that were expected to come through in the second half of 2012 are delayed and are now not expected to materialise until 2013,’’ Melbourne IT said.
The guidance was a sharp turnaround from Melbourne IT’s half-year results presentation in August, when the company said full-year EBIT for calendar 2012 was expected to be up 10 per cent from the prior corresponding period.
Investors abandoned the stock in response, with the shares closing 19 cents, or 10.9 per cent, weaker at $1.55 after having hit an intra-day low of $1.45.It was the lowest closing price for the stock since February.
Melbourne IT said the board had reviewed the company’s corporate structure and found the value of its businesses was ‘‘not being adequately recognised by the market today’’.
In response, Melbourne IT’s board would hold talks with a number of parties, primarily large offshore organisations, that have previously indicated an interest in buying parts of the company.
‘‘Significant value may be unlocked for Melbourne IT shareholders by pursuing possible different ownership alternatives in relation to these businesses,’’ it said.
Lazard and King&Wood Mallesons have been appointed as advisers.Melbourne IT said the completion of its transformation rollout had been pushed back to late 2013, from a mid-2013 finishing date announced in August.
‘‘Although some cost saving benefits will accrue through 2013, the full benefits from this transformation rollout will only be achieved from 2014,’’ Melbourne IT said.
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