Spyglass Inc. Shares Plummet Amid Royalties Dispute with Microsoft

Strategic Insights -

Spyglass Inc. announced on Thursday that it expects disappointing financial results for the fiscal first quarter due to a royalties dispute with Microsoft Corp. The Naperville-based company's shares dropped $1.25 to close unofficially at $11.75, a significant decline from its 52-week high of $55. The dispute centers on royalties owed to Spyglass for Microsoft's use of its browser software in Internet Explorer.

The company's revenue for the quarter is expected to be about $4 million, with a net loss between 10 cents and 13 cents per share. Analysts had estimated higher revenue and a loss of about 2 cents per share. Spyglass attributes the lower-than-expected revenue to its inability to collect royalties from Microsoft due to a lack of transparency in the distribution of Internet Explorer copies.

Key Takeaways:

  • Spyglass Inc. expects disappointing financial results for the fiscal first quarter due to a royalties dispute with Microsoft Corp.
  • The company's revenue for the quarter is expected to be about $4 million, significantly lower than analyst estimates.
  • Spyglass attributes the lower revenue to its inability to collect royalties from Microsoft due to a lack of transparency in the distribution of Internet Explorer copies.
  • Analysts are concerned about the implications of the dispute on the partnership between Spyglass and Microsoft, with one analyst stating that the biggest uncertainty is the future relationship between the two companies.
  • Spyglass has reportedly demanded an audit of Microsoft to determine the total amount of royalties owed.
  • The company's stock has been in a steady decline, with the shares trading as low as $10.75 during the day, near its 52-week low of $10.
  • Trading volume was heavy, with over 588,000 shares traded, compared to a three-month daily average of 461,200 shares.

Statistics:

  • Spyglass' stock loss: $1.25
  • Closing price of Spyglass' shares: $11.75
  • 52-week high: $55
  • 52-week low: $10
  • Trading volume: over 588,000 shares
  • Average daily trading volume (three months): 461,200 shares

Sources:

  • Bloomberg Business News
  • Spyglass Inc. (press release)
  • Principal Financial Securities (Timothy Summers, analyst)
  • Nesbitt Burns Securities (Abhishek S. Gami, analyst)
  • Spyglass Inc. (Randy Pitzer, spokesman)