Today's Stock Market Crashers: Why GIMO and TCS Took a Dive

Gigamon stock (NYSE: GIMO) and Container Store stock (NYSE: TCS) both tumbled today (Wednesday) to earn "stock market crasher" status.

Here's what's behind their respective drops...

Stock Market Crasher: GIMO's Revenue Is Stuck in Traffic

Gigamon is a tech company that helps web managers gauge and control traffic to their sites, analyze it better, and increase network reliability, security, and performance, among other benefits. For instance, one of GIMO's products can identify and direct incoming web traffic to specific tools on a website, as determined by the user's input and by the network manager's settings.

This morning, Gigamon stock fell more than 39% in pre-market trading.

Driving the decline was GIMO's announcement yesterday of disappointing preliminary results for second quarter 2014 ended June 28, 2014. The company expects Q2 revenue to come in around $34.5 million to $35 million, well under its previously stated guidance of $38 million to $42 million. Although gross margins and operating costs are expected to remain consistent with previously stated guidance, the drop in revenue was enough to cause GIMO stock to come crashing down.

"We are disappointed in these preliminary results," GIMO Chief Executive Officer Paul Hooper said on Tuesday. "We experienced challenges with closing the deals in our pipeline during the later stages of the quarter, as we continued to see longer review and approval cycles. However, we remain confident in our market opportunity and our leading technology that created this market. We will take steps to improve our execution in order to grow revenue and improve the predictability of our business. On a positive note, we added 84 new customers during the second quarter."

GIMO will report its official Q2 2014 earnings later this month on July 24, after market close.

Gigamon stock traded at $12.40 per share as of 11 a.m. EDT, down 31.79% so far on the day, and 55.24% year to date. This stock market crasher was downgraded to "Neutral" from "Buy" by analysts at Goldman Sachs, and to "Underperform" from "Neutral" by Bank of America/Merrill Lynch.

Our next stock market crasher also had a disappointing Tuesday, sparking massive share value loss today...

Stock Market Crasher: TCS Fails to Contain Sales Loss

The Container Store is a retailer of storage products - walk into a store and it's essentially an organizer's paradise. Boxes of all sizes, shapes, materials, and colors, customizable shelving and drawer units for any area of the home, are all found at a TCS location. The Container Store recently underwent an initial public offering (IPO) and flourished in the holiday season, with TCS stock posting a gain of 28.76% from its Nov. 4 public debut through Dec. 31.

But yesterday afternoon, TCS missed Wall Street expectations when it reported a $3.58 million loss in first quarter sales, a 0.8% decline in same-store sales, and a 58.1% drop in gross margin. It also lowered its full year financial projections. Consensus expected FY2014 earnings per share (EPS) of $0.57, but TCS now projects EPS of $0.49 to $0.54; consensus expected FY2014 revenue to land at $831 million, but TCS now projects FY2014 revenue of $820 million to $830 million.

"Consistent with so many of our fellow retailers, we are experiencing a retail funk," TCS Chief Executive Officer Kip Tindell said in the company's earnings announcement Tuesday.

Tindell likened his company's Q1 losses to those reported by many retailers in 2014.

"We are confident that customer enthusiasm for our brand and employee morale are at all-time highs, yet we continue to experience slight traffic declines in this surprisingly tepid retail environment. While consumers are buying homes and automobiles and even high ticket furniture, most segments of retail are, like us, seeing more challenging sales than we had hoped early in 2014 - so we're not alone in this," Tindell said.

Container Store stock was down 10.82% to $24.27 as of 11:30 a.m. EDT. This stock market crasher has lost 47.91% of its share value so far in 2014.

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