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Message subject : Melbourne IT (MLB)

This message was posted by JOHN on August 23, 2000 :

MELBOURNE, Aug 22 (Reuters) - Melbourne IT Ltd shares dropped 24 percent on Tuesday as a lower than expected first half net profit of A$2.19 million and a gloomy outlook led traders to a harsh reassessment of the domain name registrar's prospects.

The profit was struck on earnings before interest and tax (EBIT) of A$3.037 million, putting it on track to meet prospectus forecasts for EBIT of A$4.7 million in calendar 2000.

However, investors had expected much more after the group had previously painted a rosy picture.

"The result was significantly below expectations and the outlook was certainly a lot worse than anticipated," said an analyst who declined to be named.

Melbourne IT shares shed A$1.85 or over 21 percent to A$6.85 by 2:30 p.m. (0430 GMT), having bottomed out 24 percent lower at a 12 week low of A$6.63, on turnover of 2.5 million shares.

At its annual meeting in May the group said it was well positioned to beat it prospectus profit forecasts. Analysts had been counting on the figure being beaten by a big margin too, with a number forecasting a net profit of around A$8 million.

Analysts said they would be cutting forecasts, especially considering the second half was expected to get harder.

Melbourne IT said price pressure and a fall in volumes for global top level domain names meant it could achieve its prospectus forecast, but only with tight cost control and targeted sales and marketing.

"The next six months however will be a very challenging period," chairman Rob Stewart said in a statement.

Melbourne IT said if current trends continued the number of global top level domain name registrations would be significantly lower in the September quarter than for the June quarter.

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