Magna Stock Slumps After Fourth Quarter Warning
Updated: Wednesday, February 14, 2001 3:55 PM
Posted: Tuesday, February 13, 2001 10:41 AM
Magna Entertainment, as far as its stock is concerned, is right back where it started a year ago.
The racing conglomerate's stock price slumped 10% to $5.13 Monday on the heels of a warning that fourth quarter losses would be double what was anticipated. The stock was trading around this price almost a year ago when the company was spun off from Frank Stronach's Magna International automotive parts manufacturing company.
The volume of trading on Magna (Nasdaq:MIEC) nearly quadrupled Monday with 189,800 shares changing hands compared with the company's average daily volume of 49,000 shares. Driving the trading was Magna's estimate that losses for the fourth quarter would be $0.11 to $0.12 per share rather than a previously anticipated $0.04 to $0.05 per share loss.
Magna executives blamed the deepening losses on severance and other costs associated with relocating company headquarters from Santa Monica, Calif. to Aurora, Ontario, Canada; delays in the sale of certain non-strategic real estate assets in North America and Europe; and "to a lesser degree, higher than expected costs at certain racetracks."
For the year, Magna expects an income of about $0.01 per share. Specifics are forthcoming Feb. 19 when Magna releases its fourth quarter results. The 52-week range of MEC's stock is $2.81 to $7.88.
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