Aug. 6--Electric utility Otter Tail Corp. came unplugged Tuesday on Wall Street after an announcement late Monday that second-quarter earnings fell 78 percent, severely missing analysts' expectations.

Shares opened 15 percent lower than Monday's close and continued to fall throughout the trading session, closing at $36.16, down 19.1 percent.

The Fergus Falls, Minn.- based utility -- with diversified holdings in manufacturing, food processing and health services -- reported earnings of $3.5 million, or 11 cents a share, for the second quarter, down from $16.1 million, or 53 cents a year ago. Analysts had been expecting 56 cents a share.

"All their businesses were weaker than I would have expected, so it was a disappointing quarter for everyone," said analyst James Bellessa, at D.A. Davidson & Co. in Great Falls, Mont.

In its quarterly filing, Otter Tail Corp. dropped its projected 2008 earnings per share to a range of $1.40 to $1.65 from the previous $1.75 to $2.

"A number of factors adversely affected earnings and caused the second quarter to fall short of expectations, including challenges in our manufacturing segment and the impact of a rate-case decision," Otter Tail chief executive John Erickson said in a press release.

Otter Tail Power won a 2.9 percent rate increase from the Minnesota Public Utilities Commission in July, lower than the requested 6.7 percent increase and lower than the 5.4 percent interim rate in effect since last November. The difference, plus interest to be refunded to ratepayers, amounts to $2.2 million, or 4 cents a share, Bellessa said.

The big run-up in Otter Tail's stock price in recent months reflected speculators' interest in the company's DMI Industries, a wind tower manufacturer, Bellessa said. The current "growing pains" that Erickson cited in DMI, hurting output at its production facilities in Oklahoma, North Dakota and Canada, were bad news for those investors, Bellessa said.

Otter Tail reported revenue of $323.6 million for the quarter, compared with $305.8 million a year earlier.

H.J. Cummins --612-673-4671

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Story Source: Star Tribune, Minneapolis