Ahead of the Bell: Skullcandy shares slide

Skullcandy shares sink in premarket after headphone maker predicts big 1Q loss, sales decline

Associated Press

NEW YORK (AP) -- Shares of Skullcandy Inc. tumbled before Friday's opening bell after the headphone maker projected a big loss and drop in sales for the current quarter, and said this year's results will likely be worse than in 2012.

Skullcandy executives said in a late Thursday conference call with investors that as a result of the loss of a major customer, bankrupt British music retailer HMV, and changes to the company's product lineup, first-quarter sales drop 30 percent from a year ago. That suggests revenue of about $37 million.

Skullcandy also forecast a first-quarter loss of between 25 cents and 30 cents per share.

Those predictions fell dramatically short of Wall Street predictions. Analysts, on average, expected a first-quarter profit of 5 cents per share on $59.7 million in revenue.

The executives didn't give a formal 2013 guidance, but said they expect the company's results to come in below 2012 levels. Analysts were expecting growth.

Investors should avoid Skullcandy, said Jefferies analyst Randal Konik, given tough competition and threats to its profitability. "We anticipate trends to remain tough through the year," said Konik, who has an "Underperform" rating on the Park City, Utah, company's shares.

Skullcandy makes headphones, decorative iPod cases and T-shirts emblazoned with its skull logo.

Shares fell $1.09, or 16 percent, to $5.63 in premarket trading. The stock has dropped 53 percent in the past 12 months.

View Comments (0)