Oops. QNTM preannounced. Let's see if IOM tracks with it.
fool.newsalert.com
Quantum Earnings for Fourth Fiscal Quarter to be Lower Than Anticipated
Business Wire - March 23, 1998 16:31
%QUANTUM QNTM %CALIFORNIA %COMED %COMPUTERS %ELECTRONICS %EARNINGS V%BW P%BW
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MILPITAS, Calif.--(BUSINESS WIRE)--March 23, 1998--Quantum Corporation (NASDAQ/NMS:QNTM) today stated that its fourth quarter earnings are expected to be break-even, or slightly better, for the quarter ending March 31, 1998.
Revenues for the quarter are expected to be approximately 20% lower than the prior quarter. The expected decline in revenue and earnings is driven primarily by a sequential decline in revenues due to OEM inventory corrections of DLTtape products and continued aggressive pricing in the distribution channel for desktop hard disk drives (HDDs).
"As we approach the end of our quarter, we have seen some of our key OEM customers for DLTtape drives delay orders based on a better understanding of their inventory levels," said Michael Brown, Quantum's chief executive officer. "We are continuing to see the impact of a transition in the DLTtape business from an environment of severe supply constraints to general availability, which first arose last quarter.
"This transition has resulted in decreased orders from a few key OEM customers as they continue to adjust both their own and their channel inventories. End user demand and our installed base continue to grow strongly. Combined with lower orders from OEM customers this quarter, this growth is expected to bring OEM inventories in line with normal levels by the end of the June quarter."
According to Michael Brown, the industry oversupply conditions for the desktop HDD market have persisted, resulting in higher than usual pricing pressures in the distribution channels for the second consecutive quarter.
"As we entered this quarter, we expected desktop units and revenue to be down sequentially, consistent with industry projections. However, pricing pressures in the channel have been more severe than expected, resulting in lower than anticipated revenue and earnings for our desktop business," he said.
"While current industry conditions are difficult for the HDD business, we have continued to see healthy demand from our OEM customers. We have seen strong acceptance of our new desktop drives, Bigfoot TX and Fireball SE, and those products will represent over two-thirds of our desktop unit volume this quarter," said Brown.
"Despite the inventory transition issues in our DLTtape business, we have continued to maintain strong margins in this business and are enthused about the continued growth of the installed base of DLTtape drives. Finally, we continue to be pleased with our strong balance sheet that positions us well to weather this current industry cycle."
The company's expectations regarding results for the fourth fiscal quarter, the acceptance of new desktop drives, demand from OEM customers, the DLTtape business and expected normalization of OEM inventory in the DLTtape market are forward looking statements and actual results could vary. Actual results could be impacted by accounting adjustments made during the closing of the quarter, the roll up of actual results for the quarter from the company's business units, the actual operating results obtained, and the market environment for the balance of the quarter. In addition, the forgoing expectations could also be impacted by (1) continued pricing pressure in the hard disk drive distribution market, (2) changes in PC and server demand, (3) overall level of demand for DLTtape and desktop hard disk drive products, and (4) the ability of OEM customers to normalize their DLTtape inventory levels.
Founded in 1980, Quantum Corporation (www.quantum.com) has developed leadership positions in both fixed and removable storage products. One of the highest volume global suppliers of hard disk drives and the leader in the mid-range tape market, Quantum is widely recognized as a quality leader in the industry. The company sells a broad range of storage products to OEM and distribution customers worldwide. Quantum's sales for the fiscal year ending March 1997 were $5.3 billion.
CONTACT: Quantum Corp.
Renee Budig, 408/894-5563 (Investor Relations)
Rbudig@mail.qntm.com
Holly Campbell, 408/894-5058 (Public Relations)
hcampbel@qntm.com
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