PC Connection, Red Envelope Warn on Resultss

Merrimack, NH-based computer reseller PC Connection (Nasdaq: PCCC) and San Francisco-based gifts cataloger Red Envelope (Nasdaq: REDE) cut revenue and earnings guidance this week.

PC Connection said the increases in demand it usually experiences in the latter part of the first quarter among its small, midsize, and public-sector customers were slighter than usual. The company did say that its large-business segment was performing to expectation.

As a result, PC Connection expects first-quarter revenue to be in the range of $320 million-$325 million, down from previous revenue guidance of $335 million-$350 million.

For its fourth quarter ending April 3, Red Envelope is projecting net revenue of $21.5 million-$22.0 million, which will be an increase of approximately 25% from the previous fourth quarter. But the company is also projecting a net loss of $3.0 million-$3.5 million, compared with last year’s fourth-quarter loss of $2.3 million. Red Envelope’s disappointing performance was due in part to disappointing Valentine’s Day demand, higher-than-expected return rates, and an internal error resulting in an overestimation of gross margin for the quarter.

Net revenue for the fiscal year is anticipated to be $100.7 million-$101.2 million, an increase of approximately 27%- 28% over the previuos year. The net loss is currently expected to be approximately $5.1 million-$5.6 million; last year’s net loss was $5.1 million.

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