Ugly Duckling Hurt By Concern Over Loan Industry

Ugly Duckling Corp.’s shares fell 11 percent Friday amid increasing concern about the sub-prime auto-lending industry.

Phoenix-based Ugly Duckling fell 3/4 to 6-5/16 in trading of 1.25 million shares, almost five times the threemonth daily average. Earlier, the stock fell to 5-5/8. One year ago, it traded at 22-1/2, a 52-week high.

Steven Darak, chief financial officer of Ugly Duckling, said there weren’t any new corporate developments responsible for Friday’s stock decline. He said the company still plans to report fourth-quarter earnings on Feb. 9.

Darak said investors may be concerned about recent developments in the sub-prime lending industry. Ugly Duckling sells cars and makes loans to people with bad credit histories.

On Thursday, The Money Store Inc. said it decided to stop making new sub-prime auto loans, fire 400 people and take a $42 million loss for the year. The Union, New Jersey-based company said it would concentrate on “more profitable areas of lending.”

“It isn’t what you’d like to hear someone say,” said Darak.

Shareholders filed suit against Credit Acceptance Corp. this week, alleging that the company falsified its fourth-quarter earnings. The company declined to comment on the lawsuit.

Also this week, National Auto Credit Inc. said it would increase its loan-loss reserves, sending its shares down 69 percent.

Ugly Duckling warned investors on Oct. 29 that fourth-quarter earnings would fall short of analyst expectations. Since then, the company’s shares are down 50 percent.

In the third quarter, Ugly Duckling’s earnings from operations rose to $4.1 million, or 22 cents a share, from $2 million, or 19 cents, in the year-earlier period. That excluded a $6 million charge to cover bad loans. Its third-quarter revenue more than doubled to $45.6 million from $18.3 million in the year-ago period.

Used-car sales almost tripled to $33.5 million from $12.3 million as the company added dealerships this year, mostly through acquisitions, bringing the total to 35. Its Kars Yes dealerships purchased during the quarter gave Ugly Duckling a presence in Miami, Dallas, Los Angeles and Atlanta.

Some stocks that moved substantially or traded heavily Friday:

NYSE

Amvescap, up 6-13/16 at 90-5/16.

The Atlanta-based money-management concern agreed to acquire the asset management division of Liechtenstein Global Trust for $1.3 billion in stock and cash.

Vesta Insurance Group, down 7-3/8 at 56-1/2.

The insurer reported fourthquarter earnings that were below Wall Street estimates. Vesta is based in Birmingham, Ala.

NASDAQ

ProSource, up 7-5/16 at 14-1/4.

Holberg Industries agreed to acquire the food-service distribution provider for $342 million, or $15 a share.

JetFax, down 2 at 3-5/8.

The Menlo Park, Calif.-based company reported fourth-quarter results that were below Wall Street estimates.

Anadigics, down 19-11/16 at 14-1/8.

A number of investment firms downgraded Anadigics after the Warren, N.J.-based company reported lower-than-expected fourthquarter earnings.

CyberMedia, down 2-11/16 at 7-1/16.

The software developer reported lower-than-expected fourth-quarter earnings. A number of investment firms, including Lehman Brothers and Hambrecht & Quist, downgraded the stock.

AMEX

AMC Entertainment, up 1/2 at 27-1/2.

The theater operator’s stock rose amid rumors that chief executive Stanley Durwood will buy the remaining 40 percent of the company. AMC is based in Kansas City, Mo.