Tetra Tech Shares Swoon as It Exits Wireless Market

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Shares of Tetra Tech Inc. fell more than 20 percent on Wednesday after the Pasadena-based environmental engineering firm declared defeat in its foray into the wireless communications market.


After markets closed on Tuesday, Tetra Tech said it would exit the wireless market after trying for several quarters to boost the underperforming division. The shares swooned in after-hours trading, opening more than $3 lower than Tuesday’s closing price of $14.99. As of mid-afternoon Wednesday, the shares were trading at $12.31, down 17.9 percent.


The company said it would take a $50 million write-off on the value of its wireless business, and said it would be dropping its “major wireless customer” in California, widely believed to be Nextel Communications Inc.


Tetra Tech does mostly environmental and government consulting and engineering, and it expanded into the telecommunications market in the late 1990s, offering services to help design and place antenna towers.


“The communications was a bit of a specialty business for them,”said John Quealy, equity analyst at Adams Harkness. He added that the communications segment of the business has not been core to Tetra’s strategy since 2000.


Tetra Tech, with $1.4 billion in revenues, has more than 8,000 employees worldwide and has been undergoing restructuring since bringing in a new president and chief operating officer last year.


The company’s strength is in engineering services in the environmental water market, Quealy said, but he’s maintaining a neutral rating of “market perform” on the stock. “This is probably going to take several quarters to play out, though the strategy seems to be a good one,” he said.


On April 28, the company is scheduled to release earnings for the second quarter ending April 2.

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