Profit Warning Sends Entrust Stock Down 52%

OTTAWA — Rattled investors stripped nearly $2.2 billion from the value of security software maker Entrust Technologies Inc. on Wednesday after the company warned it would miss second-quarter profit projections by 75% after it failed to close large add-on sales to existing customers.

Entrust said it expects to post earnings of 2 cents a share when it reports its results July 18, versus a consensus analysts’ estimate of 8 cents a share carried by First Call/Thomson Financial.

The Nortel Networks Corp. spinoff said its revenue was reduced to slightly more than $29.1 million from expectations of about $33 million, due to delays in closing deals, not loss of business.

Investors wasted no time punishing the Plano, Texas-based business, which has its research and development operations in Ottawa, after the news was delivered.

The stock sank from $77.13 to as low as $34.38 on Nasdaq before rebounding slightly to end trading at $36.69, a loss of $40.44, or 52%.

Entrust develops software called public-key infrastructure, or PKI, which is used to ensure that computer users are who they purport to be. This is essential in any electronic commerce transaction.

Entrust is not advising analysts to adjust estimates for its third and fourth quarters, a spokeswoman said.