Out of the Gate: DivX Shares Tumble

NEW YORK (AP) - Shares of DivX Inc. plunged in Wednesday morning trading after the digital video technology company issued a first-quarter and 2008 outlook below Wall Street's expectations, leading an analyst to predict shares will likely drop to new lows.

The stock tumbled $3.264, or 35.7 percent, to $6.55 after hitting a 52-week low of $6.12 the opening bell.

"The notion of 2008 as a transition year is clearly disappointing and will push the shares to new lows," Canaccord Adams analyst Steven B. Frankel said in a note to clients.

He kept a "Buy" rating and $12 price target, saying the stock drop will likely present investors with a good buying opportunity.

Partly due to slow growth projections, Frankel cut his 2008 earnings outlook to 50 cents per share on revenue of $100.5 million, from a previous outlook of 65 cents per share on revenue of $99.5 million.

Analysts polled by Thomson Financial expect, on average, earnings of 67 cents per share on revenue of $104.2 million.