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Tremor Video falls sharply after reporting 3Q loss

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The Associated Press | November 8, 2013 05:13 PM EST | AP

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Shares of Tremor Video Inc. fell nearly 50 percent Friday, a day after the online video advertising company reported a wider loss in its third quarter than Wall Street analysts had expected.

THE SPARK: Tremor Video said late Thursday that its loss widened to $18.1 million, or 37 cents per share, during the third quarter. That's compared with a loss of $1.7 million, or 22 cents per share, in the same quarter a year ago.

Operating expenses increased 10 percent, and the company also issued a stock dividend to holders of its preferred stock worth $15.8 million which was tied to its initial public offering. Removing the dividend, its loss would have been $2.2 million, or 5 cents per share.

Revenue rose 17 percent to $35.3 million from $30.2 million.

Analysts expected a loss of 35 cents per share and revenue of $36.3 million.

The company also lowered its full-year revenue forecast to a range of $125 million to $126 million from between $133.7 million and $135.7 million. Analysts expect $135 million.

THE BIG PICTURE: Tremor Video, which is based in New York, went public in June. Tremor provides an in-stream video ad network for Internet-connected devices like computers, smartphones and tablets.

THE ANALYSIS: Jefferies analyst Brian Pitz said Tremor Video is facing increasing competition as clients buy more ads on TV rather than online. Pitz downgraded his investment rating of the company to "Hold" from "Buy" and cut his price target on the stock to $8 from $13.

Canaccord analyst Michael Graham expects the company's growth to recover next year. But he also downgraded the stock to "Hold" from "Buy" and his price target to $9 from $12.50.

A representative from Tremor Video did not immediately respond to a request for comment.

SHARE ACTION: Down $4.54, or 49 percent, to close at $4.72 Friday. Its shares are down 53 percent from their IPO price of $10 in June.