Tustin-based Cherokee International Corp. saw its shares fall nearly 20% Friday after the company reported lower profits and sales.
The results prompted one analyst to downgrade the stock and call for the company to find a buyer.
Cherokee, a maker of power supplies for computers and other electronics, reported after the market closed Thursday that sales in the first quarter fell 13% to $32 million.
Net income fell more than 70% to $600,000, short of analysts’ estimates.
The company blamed lower than expected demand for its data communications products and delays in material deliveries, among other things.
Michael Walker, an analyst with Credit Suisse First Boston in New York, downgraded the stock from “neutral” to “underperform.”
In a research note, he said Cherokee has been losing sales from its top customer Nortel Networks Corp. in the past, and the new results suggest the company is now losing market share elsewhere.
“We believe (Cherokee’s) best strategic option at this point is to find a buyer,either a competitor or a larger supply chain company seeking to vertically integrate,” he wrote.
Chief Executive Jeffrey Frank said Cherokee’s showing improvement.
“Our financial position remains strong, with available cash and borrowing capacity under our credit lines to support our growth plans,” Frank said.
Cherokee was one of Orange County’s larger initial public offerings last year, raising $100 million at its debut in early 2004.
