NEW YORK (AP) -- Shares of Digital River hit a nine-year low after the online commerce technology company lowered its full-year guidance and gave a third-quarter forecast that disappointed investors. Its second-quarter revenue performance also fell short.
THE SPARK: Digital River said it now anticipates 2012 adjusted earnings of 96 cents to $1.08 per share on revenue in a range of $378 million to $390 million. Its prior outlook was for adjusted earnings between $1.20 and $1.28 per share on revenue of $402 million to $409 million.
Analysts surveyed by FactSet predict earnings of $1.22 per share on revenue of $404.2 million.
For the third quarter, the company expects adjusted earnings of 12 cents to 18 cents per share on revenue of $88 million to $91 million.
Wall Street had expected earnings of 26 cents per share on revenue of $96.5 million.
Digital River also reported late Tuesday second-quarter revenue of $90.8 million, short of the $93.2 million analysts had predicted.
THE ANALYSIS: Shawn Milne of Janney Capital Markets said that Digital River's second-quarter revenue was stung by a slowdown in sales for its enterprise commerce business, which includes software, consumer electronics and games. This division makes up 79 percent of total revenue.
Raymond James' Shyam Patil believes that weakness in games, software and consumer electronics will continue.
The analyst lowered Digital River's rating to "Market Perform" from "Outperform" and removed its $20 price target.
Milne said that Digital River's third-quarter revenue outlook shows the management is anticipating softer consumer spending in Europe and North America following a significant slowdown during the final two weeks of the second quarter.
The analyst reduced the company's price target to $17 from $21 and maintained a "Neutral" rating.
SHARE ACTION: Shares of Digital River Inc. plunged $4.59, or 25.8 percent, to $13.20 in afternoon trading Wednesday. The shares tumbled to $12.87 earlier in the day, the lowest point the stock has been since April 2003. For the year to date, the stock is up 16 percent.
