Quantum sales, stock leap
Quantum's stock climbs as high as 10.2 percent in early trading, following a better than expected quarterly report.
Quantum's stock traded as high as 36-1/2, up 3-3/8 points from yesterday. The company's shares finally closed at 36-3/8, up 3-1/4 points from yesterday.
Meanwhile, Richard Schutte with Goldman Sachs raised his recommendation to "market outperform" from "market perform."
The company, benefiting from stronger demand for storage devices across the industry, yesterday reported a 21.5 percent jump in revenues and improved earnings that beat Wall Street's projections.
Quantum, one of the larger companies in its market, posted net profits of $52.4 million, or 85 cents a share. That compared with a loss of $2.5 million, or 5 cents a share, a year ago.
Analysts had expected the company to earn 52 cents a share for the quarter.
The storage maker's report reflects some of the benefits seen throughout the industry, analysts said. Faced with a shortage of some components, disk makers saw its supply slow during the second half of 1996, while demand rose because of the holiday season and a rise in corporate buying.
Analysts like David Takata of Gruntal & Company foresee the same short supply-strong demand conditions continuing through the next couple of quarters.
Quantum's revenues reached $1.48 billion for the quarter ending December 29, up from $1.2 million a year earlier. Its performance was a sizable improvement over the previous quarter, when it posted earnings of $4.6 million and revenues of $1.12 billion.
"Along with our record sales, we achieved record unit shipments of more than 6.6 million drives, generated over $200 million in cash from operations during the quarter and significantly reduced the loss associated with our high-end disk drive business," chief executive Michael Brown said in a statement.
Quantum's inventory declined by half to $106 million for the quarter, compared with $253 million in the previous three months.