From Yahoo: Quantum tumbles after Q3 warning-- Thursday December 11, 12:32 pm Eastern Time
SAN FRANCISCO, Dec 11 (Reuters) - Quantum Corp stock tumbled Thursday
after the disk drive maker warned that its third quarter earnings would
be below expectations, fueling further jitters among technology stock
investors.
''The horse is out of the barn and now all the tech stocks are falling
again,'' said one technology stock trader.
In early afternoon trade, the stock was off 5-1/16 at 18-3/4 on more
than 20 million shares traded.
After the market closed on Wednesday, Quantum, of Milpitas, Calif., said
its third quarter earnings would come in below its second quarter, due
in part to aggressive pricing by distributors. Quantum also said it will
cut back disk drive unit production and revenues will be flat with
second quarter.
Most firms on Wall Street slashed their earnings estimates for Quantum,
noting the industry's price cutting will hurt profit margins. Just
before Quantum's announcement, Seagate Technology Inc (NYSE:SEG - news)
said it was closing a plant in Ireland and laying off 1,400 staffers, in
order to cut its production levels.
David Takata, a Gruntal & Co analyst, said he cut his third quarter and
fiscal 1998 estimates and reduced his price target on the stock to $35
from $50. Takata cut his third quarter estimate to $0.31 a share, from
$0.62 previously and slashed fiscal 1998 to $1.93, from $2.51
previously.
''While the disk drive cycles can be rough on profitability, the
industry production cutbacks are a positive sign,'' Takata said in a
note to clients, adding that he believes there will be an industry
shakeout in the disk drive industry, ''with Quantum emerging in a strong
position.'' |
