StorageTek Cites Channel In Record Q4 Revenue

Revenue for the quarter was $655 million, compared to $590 million for the same quarter last year. The company earned $71 million, or 64 cents per share, in the quarter, compared to earnings of $61 million, or 57 cents per share, a year ago.

For the full year, StorageTek reported revenue of $2.2 billion, up from last year's $2.0 billion. Income for 2003 was $149 million, or $1.35 per share, up from $110 million, or $1.02 per share, for 2002.

Revenue has grown on a year-over-year basis for six straight quarters, while earnings have done so for 14 straight quarters, Patrick Martin, StorageTek chairman, president and CEO, told reporters and analysts on a Thursday earnings call. "We've done so despite living through one of the most brutal IT contractions in recent history," he said.

For the fourth quarter, both StorageTek's product revenue and service revenue grew by 11 percent compared to last year, said Martin.

The company's indirect channels increased their total revenue contribution to 47 percent in 2003, compared to 46 percent in 2002. Indirect channel sales have grown year-to-year for the last eight consecutive quarters, with increases mainly coming from U.S. solution providers and from federal integrators, Martin said.

"We are proud of the successful penetration our VADs and VARs are making in the marketplace," he said. "Our VAD/VAR revenue has nearly doubled in two years and fourth quarter was a record quarter. Our ILM focus has also helped our partners. Four of our key partners had record years in 2003 and we will continue to develop products and programs for them that will continue to fuel their revenue growth."

Martin also cited a stronger than anticipated fourth quarter for StorageTek's information lifecycle management (ILM) strategy with a role in its positive revenue and earnings growth.

"Our ILM approach is very aggressive," he said. "We have the hardware, software, and services that allow our customers to store more data on fewer devices and save time, money and resources over traditional data storage approaches. Additionally, we have a very robust roadmap for the solutions that we will be bringing to the market in the near future."

Revenue from StorageTek's automated tape solutions in the fourth quarter was up 18 percent compared to a year ago. Disk-based storage revenue, meanwhile, was flat compared to a strong fourth quarter last year.

Martin said he expects the overall IT industry to enjoy a 3 percent to 5 percent increase in 2004 compared to 2003, and that storage should continue to be a priority within that IT spending.

He also raised guidance for 2004. In November, StorageTek projected 2004 revenue to be in the range of $2.23 billion to $2.3 billion, and income to be between $160 million to $170 million. "At this time we are confident enough in the opportunities and in the economy that we are raising our guidance," he said. "We expect that revenue growth for 2004 will be mid-single digits and perhaps better. Given the expanded revenue projection, we now expect net income to be in the range of $165 to $175 million for 2004."