McData Warns as IT Spending Remains Slow
By TSC STAFF
03/05/2002 17:43
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Storage networking company McData MCDT warned after the close that its first-quarter revenue and earnings will come in lower than expected, saying other firms are continuing to take a cautious approach to spending on information technology services.
McData now expects revenue of $73 million to $78 million in the first quarter, compared with previous guidance of $85 million to $95 million. As a result, the company now expects a loss of 2 cents to 4 cents a share, excluding noncash deferred compensation and amortization charges. The company had been expecting to break even, or even post a profit of as much as 2 cents a share.
According to Thomson Financial/First Call, analysts are expecting earnings of 2 cents and revenue of $91 million. In the same quarter a year ago, the company earned 8 cents on revenue of $83 million.
Shares of McData were dropping 21.5% to $12.50 in extra-session Instinet trading, and other storage sector stocks were feeling the pain. Brocade BRCD was off 9.2%, QLogic QLGC was down 6.2%, Network Appliance NTAP was lower by 6.9%, and Emulex EMLX was losing 8.1%.
"McData's fourth-quarter revenue performance was very strong and reached record levels, which we now believe in part reflected some additional spending to utilize existing 2001 budget authorizations," the company said in a press release.
"We have been cautiously optimistic about IT spending in 2002, recognizing that the timing of a resurgence in enterprise storage and infrastructure spending would likely be closely tied to a recovery in the economy and a favorable outlook for corporate profits. Thus far in 2002, it appears that this spending is off to a slow start, with larger customers, in particular, taking longer to make major investment decisions. However, our pipeline remains strong and is consistent with our expectations at this point in the year."
The company will report its first-quarter results on April 17. |
