Divx (DIVX) which makes video software for the internet and consumer electronics devices went public about a year ago. The company developed a following, perhaps because video had become the Next Big Thing with the great success of YouTube and all its competitors. The shares made it to $31.39.
Well, that is now all in the distant past. After signaling that its Q1 numbers would beat forecasts, the company reported a solid Q1 and warned on Q2. Nice trick. The shares hit a 52-week low of $17.03 today, down about 2.5%. The company announced on Monday night. The trading day before, the stock closed at $20.50.
All of this seems very unfair to the average joe investor. On April 9, Divx said it would do better than forecast in the first quarter. It raised its estimate from a range of $17.3 million to $19.3 million to $19.8 million to $20.2 million. On April 25, the company president sold shares under a pre-arranged plan. He got $22.29 per share.
The first quarter did come in at $20.2 million. But guidance for the current quarter was only $16.7 million to $18.7 million.
For the Divx president, the rich get richer.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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