) to hold from buy.
Analyst Quinn Bolton says second-quarter results were in line after removing a one-time $2.4 million inventory charge. However, the third-quarter guidance was well below consensus estimates and normal seasonal patterns. He notes, on a pro forma basis, Ess posted 13 cents second-quarter EPS, vs. his 12 cents estimate, however, it guided third-quarter pro forma EPS to 9 cents to 12 cents, vs. his 25 cents estimate.
He says the company in its guidance cited increased pricing pressure, channel inventory in its core DVD segment, and a number of new product ramps that are ramping slower than expected. Bolton lowered his 73 cents 2004 EPS estimate to 45 cents, and cut the $1.00 2005 estimate to 60 cents.