Hard drive maker JTS Corp is warning that first-quarter results will fall below its expectations. The San Jose-based company says that oversupply and pricing pressures have led to a significant revenue shortfall and, although it has cut costs and expenses, it won’t meet its objective of turning a profit for the quarter. In February, JTS had projected that increased demand from systems integration customers would lead it to profitability for only the second time in its history (CI No 3,347). At that time, it had just secured a $10m revolving credit facility with NationsBank which it said it needed to expand first-quarter production to meet increasing demand for its Champion II desktop products. In conjunction with the profit warning, JTS also said it wasn’t able to make the interest payment that was due yesterday on its 5.25% convertible debentures and is retaining the services of an investment bank for advice on financial alternatives. It believes it will be able to work out the payment problems without too much trouble. The company is revising its business plan and financial model to posture itself more competitively. What that means, according to chief financial officer Joseph Prezioso, is focusing its efforts on the so-called value segment – PCs that cost $500 or less. There will be further job cuts, although Prezioso can’t say yet how many. Some job cuts have already been made in a restructuring that also saw the suspension of operations in JTS’s three-inch portable hard drive business. More specific announcements about restructuring lie ahead in the company’s quarterly report, due in late June. In the fourth quarter, JTS saw a minimal profit – the first in its history – but recorded a net loss of $152.5m for the year.
