Agilysys Takes 1Q Hit From Soft IBM Hardware Sales

Agilysys reported revenue of $388.4 million for the quarter ended June 30, compared with $410 million a year earlier. Hardware sales fell 10.1 percent to $296.6 million, with proprietary server sales particularly weak, the Boca Raton, Fla.-based company said. However, software sales rose 9.7 percent to $64.6 million and services sales jumped 27.7 percent to $27.2 million.

First-quarter earnings came in at $6.8 million, or 22 cents per diluted share. In the year-ago quarter, Agilysys reported a profit of $290,000, or 1 cent per diluted share, after restructuring charges.

"While disappointed with the market for proprietary servers in the quarter, I am pleased with our growth in software and services, which continue to provide differentiated value to our customers and increased gross margins to our business," Agilysys Chairman and CEO Arthur Rhein said.

Agilysys expects fiscal 2007 revenue growth of 4 percent to 6 percent. The company previously projected 6 percent to 8 percent growth, according to Brian Alexander, a technology distribution analyst at investment firm Raymond James and Associates. Agilysys' sluggish IBM sales echo recent statements by executives from IBM and distributor Arrow Electronics, Alexander said.

Agilysys shares were trading at $14.01 Thursday morning, down 9 percent, or $1.36 per share.