Quantum stock leaps a point
Shares of Quantum are up as much as a full point in trading today, despite a 79 percent decline posted in profits for the second quarter.
The company's stock rose as high as 22-5/8 in trading to close at 22-1/4, up 1 from the previous day. Quantum reported its results after the market's close on Monday.
The disk drive maker reported net earnings of $4.6 million, or 8 cents a share, down from $22 million or 37 cents a share a year earlier. Earnings were below analysts' expectations of 10 cents a share, according to First Call.
But a supportive Wall Street appears to believe that Quantum may be on the verge of hitting its next product mix and shipment cycle on the mark, said David Takata, analyst with investment banking firm Gruntal. "There is talk that Quantum is on the verge of hitting its next cycle just right," Takata said. "The company said that it expects it can do as much as 50 cents a share in the next quarter. That's a fivefold increase in a single quarter."
Fueling this anticipation of higher earnings is the company's comments that sales of its new line of desktop and 1GB platter disk drives is moving along, he said.
But in the second quarter, sales of the desktop drives were flat compared with the previous quarter, the company said.
Quantum's overall revenue growth was also flat at $1.12 billion for the quarter ending September 29, compared with $1 billion a year ago. Earnings for the quarter were driven down as the company restructured its high-end disk drive business, spokeswoman Holly Campbell said. The company discontinued manufacturing the drives nine months ago and has since contracted the work out to another company. Quantum expects to break even on that money-losing business by March, Campbell added.
The storage maker announced last month that it began production shipments on its high-end Atlas II drives to the manufacturing contractor.