Legato Systems (Nasdaq: LGTOE) fell far short of analyst estimates in the first quarter.
After market close Wednesday, the vendor of software for running corporate storage networks reported net income of $425,000, or breakeven on a per-share basis, excluding goodwill writedowns and merger-related costs. First Call consensus predicted a profit of 6 cents per share for the quarter ended March 31.
Including all charges, Legato lost $10 million, or 12 cents per share.
The company blamed the shortfall on unexpectedly large sales force defection and "management distraction" caused by accounting problems discovered near the end of the quarter. Also on Wednesday, Legato said it has filed its long-delayed 10-K annual report with the U.S. Securities and Exchange Commission. The report includes restated results for fiscal 1999.
The Nasdaq threatened to delist Legato because of the annual report delay. The company is talking to the Nasdaq about ending the delisting process and removing the "E" at the end of the company's ticker symbol.
Legato expects no revenue growth and breakeven results in the second quarter, said Louis C. Cole, CEO and president. Revenue and profits will rise "modestly" in the second half of 2000, he said.
"We expect recent disruptions to limit revenue growth for this year to the 10 percent range compared to 1999, but we would expect more rapid growth in 2001, since market demand appears to be strong, our offerings remain highly differentiated, and we enjoy a leading competitive position," Cole said.
First quarter revenue rose 38 percent year-over-year to $60.5 million.
Wednesday's announcement marks the second straight earnings shortfall for Legato, which also missed estimates in the fourth quarter.
Shares of Legato fell to 13 1/16 in afterhours activity on the Island electronic communications network, immediately following the quarterly report. The stock closed Wednesday's regular trading at 16, up 1 3/4 for the session.
Competitors of Legato include Veritas Software (Nasdaq: VRTS).>