Analysts underestimated the depth of losses suffered Read-Rite Corp. (Nasdaq: RDRT) in the third quarter, and it won't get any easier to predict the next one.
The maker of disk drive recording heads and related products lost almost twice as much as Wall Street expected for the quarter ended June 27. In fiscal third quarter results released after market close Wednesday, Read-Rite posted a net loss of $46.5 million, or 95 cents a share, not including one-time events. First Call's survey of six analysts predicted a per-share loss of 49 cents.
Third quarter sales fell to $174.8 million, down 15 percent from $206.2 million in the second quarter. when Read-Rite lost $19.4 million, or 39 cents a share. Lower unit sales -- shipments of drive heads fell 16.2 percent sequentially -- and continued price declines hurt Read-Rite's revenue. Demand also fell as the company continued shifting its products to giant magnetoresistive technology.
After a disappointing first quarter, Read-Rite executives had cautioned investors to expect a loss for the second one as well. That trend continued Wednesday, as the company said it expects another sequential decline in sales and a net loss for the current quarter, which ends Sept. 26. Read-Rite declined to provide a more detailed forecast, citing industrywide uncertainty about unit volumes and demand from end users.
Read-Rite currently expects a sales rebound in the first quarter of fiscal 2000, because of seasonal strength and the introduction of new programs. The storage industry has been battered in recent quarters by a combination of industrywide overcapacity and pressure from PC manufacturers waging price wars among each other.
Other companies reporting quarterly results:
First quarter net income was $14.7 million, or 16 cents a share, on sales of $117.4 million. Revenue rose 42 percent year-over-year, with product license revenue rising 45 percent over the same period.
Net income rose 30 percent year-over-year in the first quarter, to $6.8 million from $4 million in the comparable period a year ago. Revenue increased 33 percent, to $31.6 million from $23.8 million. Communications-related sales rose 29 percent sequentially and 84 percent year-over-year.
First Call's survey of three analysts predicted a loss of 8 cents. Sales fell to $62.6 million, from $71.4 million in the year-ago period. Network Equipment said it planned to cut jobs as part of a reorganization plan.>