Digital River Inc's top customer Symantec has notified the e-commerce services provider that it will not extend its existing contract, knocking Digital River's shares down 32 percent in pre-market trade.
Digital River, which also said it expects third-quarter results to be at or slightly above the top end of its outlook, added that the e-commerce contract with Symantec expires on June 30, 2010.
In 2008, sales of products to Symantec accounted for about 24 percent of Digital River's revenue, while sales from proprietary Digital River services to Symantec consumers accounted for 9 percent of revenue.
In July, the company forecast third-quarter earnings of 38 cents to 41 cents a share, excluding items, on revenue of $96.5 million to $98.5 million.
Digital River expects sequential revenue from its non-Symantec business to have grown at about 8 percent in the third quarter, compared with about 2 percent growth in the second quarter.
Shares of Digital River were trading at $27.53 before the bell. They closed at $40.42 Friday on Nasdaq. (Reporting by S. John Tilak in Bangalore; Editing by Himani Sarkar)