of lower earnings
Shares fall 42 percent asBy Russ Lynch
Aston Hotel's parent also
withdraws an offer to
sell 4 million shares
Shares of ResortQuest International Inc. tumbled nearly 42 percent on Wall Street today after the company warned that its second-quarter earnings are likely to be lower than analysts had expected.
In New York Stock Exchange trading, ResortQuest's stock closed at $8.62, down $6.12 from Friday's close. More than 1.8 million shares traded hands today.
The company, whose biggest subsidiary is Hawaii's Aston Hotels & Resorts, also said today that it is withdrawing its proposal to sell 4 million shares -- 2 million held by the company and 2 million by its founding shareholders.
The proposed stock sale, which would have included some 430,000 ResortQuest shares held by Aston's former owner Andre Tatibouet, was reported last week. At last week's closing price of $14.75 a share, Tatibouet would have received about $6.3 million. At today's closing price, the shares he was to sell would have fetched only $3.7 million. Tatibouet, who is chairman of the Aston subsidiary, holds 1.7 million ResortQuest shares.
Commenting on its earnings warning, acquisition-bound ResortQuest said that while its operations are up to its expectations, it has had greater expenses to cover acquisition costs.
As a result, it now expects to report earnings of 10-to-14 cents a share for the quarter that will end June 30. An analysts' consensus estimate by First Call had put the company's second-quarter earnings at 18 cents a share.
The Memphis, Tenn.-based company was formed last May after a stock offering created a company to own Aston and a dozen other vacation property businesses across the country. It has since acquired another 12 businesses and is looking for others.
David Sullivan, chairman and chief executive officer, said he wouldn't normally comment on estimates this far ahead but two factors unique to the company's business require comment. One is that general and administrative expenses were increased to absorb new acquisitions and to establish a national brand identity.
Second, the timing of some planned acquisitions is changing. Some that would have been added to results early in the second quarter will not show up in the figures until late in the period, he said. And the timing changes mean that some acquisitions will miss peak periods for the seasonal vacation businesses, Sullivan added.