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Liquidity Services sinks to new low on outlook cut

WASHINGTON (AP) -- Liquidity Services Inc.'s shares sank Thursday after the online auction company cut its earnings outlook on the anticipated impact of the weak economy.

The company, based in Washington D.C., runs auction sites such as liquidation.com and networkintl.com, where it sells a variety of surplus equipment that business and government organizations no longer need.

Liquidity Services said that while economic conditions have improved, its overall outlook remains cautious due to the volatility in the broader environment. This includes some instability from debt ceiling negotiations and its potential impact on the retail and industrial supply chains, as well as GDP growth.

The company also said it plans to invest in its technology and products to grow its business. It said it does expect its business to expand in the long-run, as consumers look to save money and more businesses and government entities cut costs and sell assets.

Liquidity Services expects to earn $1.90 to $2.02 per share for the full year on an adjusted basis, down from its prior forecast of $2.05 to $2.23 per share. Analysts surveyed by FactSet were expecting the company to earn $2.14 per share, on average.

The forecast sent shares down nearly 25 percent by midday, dropping to their lowest point since November 2011. It also overshadowed the company's stronger-than-expected fiscal first-quarter profit.

The company earned $6.7 million, or 20 cents per share, for the quarter that ended Dec. 31. That compared with $9.1 million, or 28 cents per share, in the same quarter of the prior year.

On an adjusted basis, results in the quarter came to 41 cents per share, versus 37 cents per share last year.

Revenue for the quarter increased roughly 15 percent to $122.2 million from $106 million.

Analysts, on average, were expecting earnings of 38 cents per share, on revenue of $128.7 million.

In afternoon trading, shares fell $9.55, or 23.3 percent, to $31.52, after earlier dropping to $29.30. Volume was more than 10 times average daily trade.