Security Spending Tightens, LoJack Warns For Year (LOJN)

Shares of LoJack Corporation (NASDAQ: LOJN) are being hit hard in after-hours trading.  The company is issuing an earnings warning for 2008, although it is quick to point out that this is believed to be entirely due to the current economic situation rather than competitors winning business away or due to dealer relationships.

The guidance was put at $0.75 to $0.85 for this fiscal year, far short of the $1.15 consensus estimate from First Call.  It sees guidance for each the first and second quarter at $0.04 to $0.20 per quarter.  Unfortunately, estimates are $0.25 for this quarter and $0.30 for next.  Fiscal revenues were also put at $213 to $218 million, under the $233+ million estimate from First Call.

The result of the disappointing domestic new cars sales in January and February have led the company estimates for the full year 2008.  The painful part is that they are now expected to be at their lowest level since 1998. The company also noted an acceleration in the decline of new car sales in the first quarter, auto manufacturing cutbacks, and concern expressed by several of the large auto retailers give LoJack the impression that things will not improve in the second half of the year as it had planned.

Southern California is particularly hard hit, and LoJack noted that this was one of its highest penetrated new car markets.  The good side of this is that it still expects double-digit increases in unit volume in international business in 2008.

Unfortunately, this has all of the ear-marks of a generally poor scenario.  In an effort to cut costs the consumer is opting to drive the existing car longer.  It’s probably a safe bet that purchases for used cars is pretty soft too.  LoJack shares are down 20% to $10.20 in after-hours trading.  Its 52-week trading range is $10.05 to $24.24.

Jon C. Ogg
April 1, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at [email protected]; he does not own securities in the companies he covers.