CIT Group's $4.1 billion deal for Newcourt Credit Group may be in jeopardy, analysts say.

Last week Toronto-based Newcourt reported first-quarter earnings of 24 cents a share, missing analysts' estimates by 11 cents. The results included a one-time gain of 23 cents.

The unexpectedly low earnings have observers wondering whether Newcourt is worth the purchase price of 0.92 CIT share for each Newport share. Livingston, N.J.-based CIT closed Tuesday at $29.50.

The CIT-Newcourt deal includes a clause nullifying the agreement if Newcourt's earnings are not at least 75% of analysts' consensus estimates for the first and second quarters.

Since the May 5 earnings announcement, Newcourt's stock has fallen almost 40%. It closed Tuesday at a 52-week low of $17.50 a share.

"There's a lot of speculation that this deal won't get done," said Jennifer Scutti, a Prudential Securities analyst. And its terms are bound to change if the deal does close, she said.

"The market is basically doing CIT's dirty work for them," said Reilly Tierney, a Fox-Pitt, Kelton analyst. "I think 92 hundredths of a share is history."

Newcourt attributed missing the consensus to a decline in securitization income, but not all analysts were convinced. "The question is, 'Was this just a securitization issue, or was there more to it?,'" said Robert F. Young, senior credit officer at Moody's Investors Service in New York.

Newcourt's profit margins came down significantly during the quarter, Mr. Young said. Nonperforming assets increased, and provisions for charged- off assets decreased, he said.

On May 5, CIT released a statement saying that it would be "reviewing Newcourt's financials with management." A CIT spokesman said the company did not want to comment further.

Newcourt did not return phone calls.

J.P. Morgan & Co. was CIT's investment banker on the deal. Goldman, Sachs & Co. represented Newcourt.

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