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Adaptec on target in fourth quarter

Adaptec Inc.(Nasdaq: ADPT) hit estimates for its fourth quarter with earnings of 49 cents a share. The company also formed a new software unit.

The storage provider was in need of good news after shares plummeted in January after the company said it would restate its second quarter.

Pro forma net revenue was $213 million, up 20 percent from revenue of $178 million a year ago, and up 1 percent sequentially.

Pro forma net income was $54 million, up 33 percent over 1999's quarter, but down 6 percent from income of $58 million in the third quarter. Actual net income was $36 million. Diluted earnings of 49 cents a share were up 36 percent from the corresponding quarter last year, but down 6 percent from 52 cents a share in the previous quarter. Actual diluted earnings were 33 cents a share.

Pro forma operating results for the fiscal year included net revenue of $811 million, up 35 percent from 1999, and net income of $210 million, up 136 percent from income of $89 million in 1999. Diluted earnings per share were $1.91, up 142 percent from 79 cents a share in 1999. First Call had predicted fiscal 2000 earnings of $1.90 a share for the year.

Adaptec also said Thursday it will create a separate entity around its current Software Products Group to focus on digital content management. The new business is also intended to enhance shareholder value, and "build a culture conducive to the retention and attraction of talented software employees" the company said.

The new entity will start out with an annual revenue run rate in excess of $120 million, with customers such PC manufacturers, CD-recordable manufacturers, and software retailers.

Adaptec just announced yesterday the formation of the Storage Networking Solutions Group, a strategic move as networking and storage technologies begin to converge. The business will address the new storage fabric marketplace where storage devices are connected directly into network-like fabric.

The company said it expects robust demand in the second half of the fiscal year, especially as Storage Area Networks are beginning to take off in the PC Server space.

Adaptec's competitors include Oak Technology (Nasdaq: OAKT), Mylex Corp, a subsidiary of IBM (NYSE: IBM) and American Megatrends.