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CNT Smacked for Its Tweak

Computer Network Technology Corp. (CNT) (Nasdaq: CMNT) has adjusted its earnings outlook down, drawing negative attention from investors and analysts.

The company announced yesterday that instead of a pro forma profit of 2 to 5 cents per share, the company anticipates a pro forma loss between 3 and 5 cents per share when it announces earnings on May 17 (see CNT Warns of Loss). Revenues will still match predictions of $95 million to $100 million.

By midafternoon today, CNT shares were trading at $5.90, down $1.24 (17.37%). Bear Stearns & Co. Inc. downgraded CNT's stock from Peer Perform to Underperform. Analysts Andrew J. Neff and colleagues cite "intensifying competitive conditions in the Fibre Channel SAN market... and a weak balance sheet."

The firm, which in another capacity acted as financial advisor to CNT during its purchase of Inrange last year (see CNT Walks Off With Inrange), notes this is the second time in roughly two months it's had to lower its rating on CNT.

Bear Stearns also lowered its EPS estimates, saying CNT is likely now to show a profit of 18 cents, not 32 cents, for 2004, and 35 cents, not 45 cents, for 2005.

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