Storage Earnings Wrap-Up: Tough Times For Most


Several storage companies reported earnings over the past week, with mostly down results.

Minneapolis-based Datalink, one of the country's top independent storage solution providers and one of the only publicly traded VARs, on Thursday reported revenue and profits fell significantly in its fourth fiscal quarter and fiscal 2001, which ended on Dec. 31.

Datalink reported revenue of $24.6 million for the quarter, down about 38 percent compared with the $38.6 million reported for the same period a year ago. The company lost $1.2 million, or 14 cents per share, compared with earnings of $502,000, or 6 cents a share, in the last quarter of 2000.

Datalink's losses were in line with analysts' revised estimates, according to First Call.

For the full year, Datalink recorded revenue of $124.8 million, down about 10 percent from the company's 2000 revenue of $137.8 million. The company lost $505,000, or 6 cents per share, compared with a profit of $4.4 million, or 48 cents a share, in 2000.

In a statement, CEO Greg Meland blamed the company's financials on a decline in overall capital spending by customers. "Economic uncertainty was made worse by the tragic events of Sept. 11, causing many companies to decrease and delay technology spending," he said.

As a result of cuts in IT spending, Datalink cut 10 percent of its workforce, Meland said.

Company executives expect the current fiscal quarter to show revenue in the $20 million to $24 million range and an operating loss of 16 cents to 21 cents per share.

Investors signaled their disapproval on Thursday by selling Datalink stock, driving the price to $5.33 a share, a drop of 38 cents per share, or 6.7 percent, for the day.

Advanced Digital Information Corp. (ADIC) on Thursday reported a slight uptick in revenue but a big drop in profits for its first fiscal quarter of 2002, which ended Jan. 31.

Revenue for the company reached $96.7 million, up 5 percent over the $92.4 million recorded for the same period last year. The company earned $2.8 million, or 4 cents a share, in the quarter, compared with $6.5 million, or 11 cents a share, a year ago.

Earnings were slightly below analysts' expectations of 5 cents a share, according to First Call.

Chairman and CEO Peter van Oppen said in a statement that about half the sales of the company's storage automation products came from the ADIC-brand business, and half from OEMs, especially Dell Computer and IBM. OEM sales grew 16 percent over the same quarter last year, while branded business fell slightly, causing an erosion in margins.

Van Oppen said he expects sales to fall in the $95 million to $105 million range for the second quarter ending April 30. That includes a slight decline in the percentage of OEM business and growth in the U.S. branded business.

Shares of ADIC, which revealed its results at the close of the trading day, fell 82 cents, or 5.3 percent, to $14.58 prior to the news.

Brocade Communications Systems on Wednesday reported revenue for its first fiscal quarter of 2002, which ended Jan. 26, was $123.1 million, down about 25 percent from the $165 million reported for the same quarter last year.

The San Jose, Calif.-based builder of SAN equipment also reported income of $11.7 million, or 5 cents per share, compared with $32.5 million, or 15 cents per share, reported last year.

Analysts had been expecting a profit of 6 cents a share, according to First Call.

In related news, executives of Broomfield, Colo.-based rival switch vendor McData celebrated Valentine's Day by filing a complaint in the United States District Court for the District of Colorado against Brocade for infringement of a McData patent, titled Method and Apparatus for Measuring Traffic Within a Switch. McData executives said the patent refers to key technology related to filtering and measuring frame traffic within a switch.

On Tuesday, executives of Network Appliance said the Sunnyvale, Calif.-based NAS vendor recorded revenue of $198.3 million for its third quarter of fiscal 2002, which ended Jan. 25. That was a drop of more than 30 percent from the $288.4 million recorded in the prior year.

The company earned $7 million, or 2 cents per share, for the quarter, compared with $34.1 million, or 9 cents per share, a year ago. Pro forma earnings, which includes adjustments for acquisitions and stock-based compensation, were $15.5 million, or 4 cents a share, for the quarter, compared with $38.9 million, or 11 cents per share, last year.

Analysts had been expecting the company to report earnings of 4 cents a share, according to First Call.

During the earnings call, Jeffry Allen, executive vice president of finance and operations and CFO, said the company expects moderate revenue growth of 2 percent to 5 percent in the fourth quarter. Allen said pro forma earnings for the fourth quarter should be flat with third quarter.