Rosetta Stone says earnings won’t meet expectations

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Arlington-based Rosetta Stone Inc. said Friday that its fourth-quarter results will not meet company expectations because of softness in the U.S. consumer market.

The company said that, while its international and institutional sales have continued to be strong, U.S. consumer sales have lagged. One factor has been the recently announced Chapter 11 bankruptcy reorganization of retailer Borders Group Inc.

Rosetta Stone sells technology-based language-learning programs.

Based on a preliminary review, Rosetta Stone expects to report fourth-quarter total revenue of about $74.2 million on sales bookings of approximately $81.8 million, compared to previously issued guidance of $76 million to $81 million and $82 million to $88 million, respectively. Sales bookings represent executed sales contracts received by the company.

The company expects GAAP (generally accepted accounting principles) net income for the fourth quarter of about $4.9 million, or 23 centers per diluted share, compared with previously issued guidance of 28 to 38 cents per diluted share. Net income and earnings per share estimates include a benefit related to the reversal of valuation allowances on deferred tax assets of approximately $2.3 million, or 11 centers per diluted share, that were not contemplated in the preparation of its earnings guidance.

Final fourth-quarter results will be reported on Feb. 28.

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