Tuesday, July 10, 2012

Quantum (NYSE: QTM) Issues June Quarter Warning; Shares Crushed

Quantum (NYSE: QTM) Issues June Quarter Warning; Shares CrushedAtlanta, GA 7/10/12 (StreetBeat) -- Shares of data storage play Quantum Corp. (NYSE: QTM) are trading sharply lower Tuesday morning after the company warned that results for its fiscal first quarter ended June 30 will miss Street estimates.

For the quarter, the company said it now expects revenue of about $141 million and a non-GAAP loss of about 3-4 cents a share.Previous revenue guidance was $155 million. The Street consensus was $155 million and a non-GAAP break-even quarter.

The company said the revenue shortfall “is primarily due to lower-than-expected revenue in Europe and challenges closing large deals across all regions in the last few weeks of the quarter.”

“We saw good sales momentum on a number of fronts, but, unfortunately, it was not sufficient to overcome the shortfalls in Europe and big deals,” CEO Jon Gacek said in a statement. “Despite this, as we begin our second fiscal quarter we have not changed our goal of driving total revenue growth for the full fiscal year and are focused on what we can control – namely meeting the data protection and big data management needs of our customers. At the same time, we will continue to monitor global events and their potential impact on our revenue opportunities moving forward and adjust spending levels if conditions warrant it.”

The company will report full results on July 31.

FBN Securities analyst Shebly Seyrafi this morning cut his rating on the stock to Sector Perform from Outperform, cutting his target to $2.30, from $3. He thinks that in addition to the factors the company cited, Quantum is getting hurt by competition form EMC. He thinks the company’s fundamental value is only about $1 a share, but that it has a take-out value of close to $3. He writes that his target price “embeds a higher than 50/50 chance” that the company is acquired over the next few years, possibly by NetApp.

QTM this morning is down 40 cents, or 19.1%, to $1.70.

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