NEW YORK (AP) -- Shares of Black Box Corp. plummeted on Friday, after the distributor of data and voice networking products to businesses reported fourth-quarter earnings that fell below analysts' estimates and disclosed a $7 million charge related to "misconduct" by its Italian operations.
After the market closed on Thursday, the company reported a fourth-quarter profit of 26 cents per share, an adjusted profit of 53 cents per share and revenue of $174.3 million.
On average, two analysts surveyed by Thomson Financial forecast a profit of 75 cents per share.
Stifel Nicolaus analyst Jeffrey Beach, who had estimated a per-share profit of 76 cents on revenue of $188.3 million, estimates revenue missed the company's own internal budget as well.
"This shortfall cascaded into margin weakness in both the voice and data services segments," wrote Beach in a research note.
He reduced his Black Box 2007 earnings-per-share estimates to include stock option expenses and lower revenue, to $3 from $3.74, along with his 2008 estimate to $4.31 from $4.75.
Separately, included in Black Box's earnings was a $7.5 million pretax charge relating to adjustment of earnings from 2003 to 2006 from the company's Italian branch. The charge is due to "misconduct by certain local operational and financial management of the company's Italian operations acting in collusion with one another for the purpose of overstating local financial results," the company wrote in a statement.
The company said all members involved have been fired and said it is considering legal action against them.
"The company believes that all accounting irregularities have been identified, corrective action taken, and that the Italian Operations Adjustment captures all necessary corrections," Black Box said in a statement.
"We are very disappointed by the situation in Italy," added Fred C. Young, Black Box chief executive, in a statement. "By no means do we believe this misconduct is representative of the overall integrity of the Black Box Team at large."
Shares of Black Box fell $9.96, or 18 percent, to $43.97 during morning trading on the Nasdaq, where it was the top percentage loser. The stock has traded in a 52-week range of $33.63 to $55.37.
