Quantum Corp, The Milpitas, California-based provider of data storage products, has reported first-quarter net income up 175% at $8.3m on revenue down 1.8% at $1.08bn. Earnings per share for the quarter amounted to $0.05 per share, when analysts surveyed by First Call were looking for $0.10. The poor earnings fell at the bottom of the range that Quantum set out when it issued a profit warning last month. Before the warning, analysts had been expecting earnings of $0.31.
The company blamed the shortfall on overall pricing pressure in the desktop hard disk drive market, with the sequential rate of price decline roughly double that of the prior two quarters. Although Quantum insists demand for both PC hard drives and high- end tape drive remains strong, the boom in low-cost machines and aggressive price cuts by rival Seagate Technology Inc have hit the company hard.
For the quarter, hard disk drive revenue was $752m on unit shipments of 6.6 million, down from $847m on shipments of 5.6 million in the year-ago period. The business reported a net loss of $43m. The DLT and storage systems group, meanwhile booked revenue up 29% year-over-year at $331m and net income up 18% at $51m. Gross margin for the business was 46%.
Quantum’s two main businesses, hard drives and tape storage systems, may soon be separated, as shareholders are set to vote today on a plan to create individual tracking stocks. Assuming the approval of such a plan, pro forma earnings per share for the DLT and storage systems group would have been $0.30 for the first quarter.
