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Inrange exceeds earnings expectations

Amid the deluge of lowered financial warnings, one company pipes up with an unusual announcement: The storage network hardware maker will pull in more money than analysts expected this quarter.

Amid the deluge of lowered financial warnings, one company piped up with an unusual announcement Thursday: Storage network hardware maker Inrange Technologies will pull in more money than analysts expected this quarter.

Inrange stock surged $5.13, or 35 percent, to $19.75 on the news. The company said that for the quarter ended Dec. 31, revenue from its high-end, network-switching equipment is expected to grow 200 percent compared with the same quarter the year before, and total revenue will increase 47 percent.

Salomon Smith Barney analyst H. Clinton Vaughan said that growth rate would mean revenue of $70.6 million.

"We are very pleased with our preliminary review of (fourth-quarter) results," Inrange Chief Executive Greg Grodhaus said in a statement. He also said fiscal year 2001 overall results will be better than expected.

Inrange's upbeat report stands in sharp contrast to the warnings issued by other technology companies. Hewlett-Packard reported Thursday that shrinking spending on high-end equipment is contributing to its lowered revenue projections. Gateway also said Thursday it's cutting 3,000 jobs to compensate for its lowered revenues.

Inrange switches are used in SANs (storage area networks), a network separate from ordinary computer networks that is devoted to connecting standalone storage devices to servers. SANs, while powerful, are expensive and complicated, and companies such as Inrange, Qlogic, EMC, and IBM have been struggling to better standardize SAN technology so it's easier to use.

Meanwhile, customers have been paying lots of money for the SAN hardware. The ever-growing needs for data-storage space, combined with the increasingly sophisticated storage features offered and required, has meant a rosy past and future for the storage industry.

While some analysts have said they expect storage companies to weather the current technology buying slowdown, Vaughan and fellow Salomon Smith Barney analyst John Dean believe the industry won't be completely immune from the tightening budgets.

"If there is a sharp pullback in domestic (information technology) spending, we expect storage demand to be negatively impacted. However, under such circumstances we believe storage should be among the more insulated sectors due to the increasing importance to move, backup, manage, and access greater amounts of data in more ways and more often," the analysts said in a note Thursday.

Driving increased demand for storage is the "insatiable demand to access data" spurred by the growth of the Internet; established companies expanding onto the Internet; new data-intensive technologies such as MP3 files, video conferencing, and digital photography; and increasing computerization internationally, the analysts said.

Inrange expects to announce final financial results for the quarter on Feb. 13. Analysts surveyed by First Call on Thursday expected the company to report earnings of 7 cents per share.