Quantum hit by storage glut
In another disappointing financial forecast, Quantum says its earnings for the fourth fiscal quarter will be lower than expected.
The storage device maker said its fourth-quarter earnings for the three months ending March 31 are expected to be "break-even or slightly better" than that for the same quarter a year ago. Quarterly revenue is expected to be about 20 percent lower than the previous quarter.
First Call had expected earnings of about 25 cents per share this quarter for Quantum, compared with 56 cents per share for the like quarter a year earlier. The company posted revenue of $1.52 billion in the fourth quarter. The company's stock closed at 20-1/2 yesterday, up 5/16.
The earnings warning came after the market closed yesterday. In today's trading, Quantum shares reacted to the warning by inching up slightly in early trading, to 21-5/8.
"As we approach the end of our quarter, we have seen some of our key OEM [original equipment makers] customers for tape drives delay orders based on a better understanding of their inventory levels," Quantum chief executive Michael Brown said in a statement. "We are continuing to see the impact of a transition in the tape business from an environment of severe supply constraints to general availability, which first arose last quarter."
Brown added: "This transition has resulted in decreased orders from key OEM customers as they continue to adjust both their own and their channel inventories. End-user demand and our installed base continue to grow strongly."
He also said industry oversupply conditions for the desktop storage market have continued, "resulting in higher-than-usual pricing pressures in the distribution channels for the second consecutive quarter."