Storage, Channel Earnings: The Good, Bad And The Ugly

The results, a mix of the good, the bad and the ugly, match the view that Carl Wolfston, director of Headlands Associates, a Pleasanton, Calif.-based solution provider, said he is hearing from his customers. "I'm trying to see what people want to buy," he said. "I'm having meetings with five vendors next week to get their takes."

EMC lost $70 million, or 3 cents per share, in its fourth quarter, compared with net income of $562.8 million, or 25 cents per share, in the year-ago quarter. Thomson Financial/First Call projected a loss for EMC between 4 cents and 10 cents.

EMC expects to lay off another 1,140 people in the next few months, leaving it with a total of about 19,000 employees by mid-2002, said Joe Tucci, president and CEO of the Hopkinton, Mass.-based storage vendor.

The company will also continue to transition to a mixed direct/channel sales model. "Channel partners will be our root to geographies we couldn't reach before," Tucci said.

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EMC's sales fell to $1.5 billion for its fourth quarter, down by more than 43 percent from a year ago.

During the fourth quarter, people wanted to buy Storage Technology's high-end tape-automation products, said Patrick Martin, chairman, president and CEO of StorageTek.

The Louisville, Colo.-based company earned $40 million, or 38 cents per share, for the fourth quarter, up 8 cents per share from last year and 6 cents per share better than expected, according to Thomson Financial/First Call. StorageTek reported $566.4 million in revenue, a 7.5 percent drop from the year-ago quarter.

Also beating expectations for its second fiscal quarter was tape-automation vendor Overland Data. It earned $2 million, or 18 cents per share, beating Thomson Financial/First Call's forecast by 5 cents per share. The company reported $45.6 million in sales, a 4.6 percent increase from last year.

Overland Data President and CEO Christopher Calisi said he expects revenue for the current quarter to grow between 15 percent and 20 percent, compared with last year, and projects earnings per share will double.

Emulex lost $28.3 million, or 35 cents per share, for the second fiscal quarter, compared with net income of 25 cents per share last year, but the Costa Mesa, Calif.-based maker of storage networking host bus adapters raised its outlook for the rest of the year.

QLogic, Aliso Viejo, Calif., reported third-quarter revenue of $83.6 million, down 14 percent from the same quarter last year. The company earned 18 cents per share, compared with 26 cents per share last year.

Exabyte lost $8.8 million, or 32 cents per share, for its fourth quarter, down 2 cents from last year and falling short of Thomson Financial/First Call's forecast of a loss of 13 cents per share.

The Boulder, Colo.-based manufacturer of tape drives and tape automation products reported sales of $35.7 million for the quarter, down 41.3 percent from last year.

In addition, Exabyte chairman, president and CEO William Marriner last week stepped down and was replaced as president and CEO by Juan Rodriguez, Exabyte's co-founder and chief technologist.

On the channel side, direct marketers CDW Computer Centers and PC Connection warned that recovery is still at least a quarter away, while distributor Avnet expects to break even in the current quarter.

CDW, Vernon Hills, Ill., earned $41.9 million, or 47 cents per share, compared with $42 million, or 46 cents per share, for the year-ago period. The results beat Thomson Financial/First Call's forecast by 1 cent per share.

Merrimack, N.H.-based PC Connection earned $1.4 million, or 6 cents per share, in the fourth quarter, compared with $5.5 million, or 22 cents per share, last year.

Phoenix-based Avnet beat analysts' expectations but posted a loss of $2.6 million, or 2 cents per share, in its second fiscal quarter. In the year-ago quarter, the company posted a profit of $99.6 million, or 83 cents per share.