Ceradyne cuts lower end of FY08 EPS, sales outlook - update

(RTTNews) - Ceradyne, Inc. (CRDN | Quote | Chart | News | PowerRating), a provider of advanced technical ceramic products and components for defense and commercial applications, cut the lower end of its fiscal 2008 earnings and sales outlook due to an expected delay in a multi-year contract awarded by the U.S. Army.

In a statement Wednesday, the company said it is aware of a protest filed with the Government Accounting Office by a bidder on the contract for XSAPI/ESAPI, a body armor technology.

According to Ceradyne, the award will be delayed unless the Army overrides the protest on urgent and compelling grounds. The delay in the award of the contract would result in lower shipments and earnings in the fourth quarter of 2008.

The company also said that various government officials and interested politicians believe the award should not be further delayed because of the protest.

Ceradyne currently projects full-year earnings per share in the range of $4.25 - $4.80 compared with $4.70 - $4.80 expected on July 25. Sales are now expected to be between $710 million and $750 million, in comparison with its previous forecast range of $740 million - $750 million.

Analysts are of the view that the company will earn $4.75 per share in fiscal 2008 on sales of $743.35 million.

Ceradyne said that the lower end of the sales and earnings range assumes that an XSAPI award would be made to the company in late 2008 with only one month of XSAPI shipments in the fourth quarter.

The company also said that the earnings range does not include the effect of the estimated $10 million pre-tax charge to be incurred in the third quarter related to the SemEquip, Inc. acquisition. Last month, Ceradyne announced the completion of the purchase of SemEquip, a developer of cluster ion implantation sub-systems and advanced ion source materials for the manufacture of logic and memory chips.

For the recently closed second quarter, Ceradyne's profit was down due to lower revenues.

CRDN is trading at $35.79, up $0.59, on a volume of 190,005 shares.

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