The ball game is over folks!
Our only hope now is a buy out!
For Immediate Release
StorageTek Expects First-Quarter Earnings Between $.05 and $.10 Per
Share
LOUISVILLE, Colo., April 15, 1999--StorageTek' (Storage Technology
Corp., NYSE:STK) today said that based on its preliminary assessment of
its first-quarter 1999 performance it expects total revenue and net
earnings will fall significantly below the range of analysts' published
estimates. For the first quarter ended March 26, 1999, the company
expects net earnings will be within a range of $.05 to $.10 per share.
According to First Call, the range of expectations of security analysts
is $.39 to $.46 per share. The company said it plans to report final
results on April 29.
"Our preliminary evaluation indicates that first-quarter revenue growth
will be slightly higher than our 5 percent 1998 revenue growth rate.
That is well below our expectations and is primarily attributable to
slower than expected acceptance of the Virtual Storage Manager' (VSM')
system and manufacturing constraints on the 9840 tape drive," said David
E. Weiss, StorageTek chairman, president and chief executive officer. "A
shortfall in sales of these higher-margin products led to lower than
anticipated gross margins. Compounding the revenue and margin weakness,
operating expenses have increased significantly over last year, in
anticipation of higher revenue growth.
"We must address both short-term tactical issues and longer-term
strategic expense issues," said Weiss. "The tactical problems are
represented in the revenue and margin shortfalls from the 9840 tape
drive and VSM system. I believe the revenues from these programs will
improve throughout the year.
"To address operating expense and strategic focus we are implementing a
voluntary separation program," said Weiss. "Our goal is to reduce our
workforce by approximately 500 employees through this program and
through normal attrition during the year. More than half of this
reduction should occur by the end of the second quarter. When completed,
annualized savings should be approximately $40 million. We expect that
the second-quarter charge for this program will be approximately $20
million to $25 million, excluding asset and other related charges. This
action should achieve necessary cost reductions, but also reflects a
strategic process to narrow and refine our product mix to focus
resources on areas of highest growth and value-add.
"The growth rate in the first quarter, while disappointing, lays a
foundation for subsequent improvement throughout the year. While I am
disappointed with our slow start, I am confident that we have the
products and solutions to grow the revenue and that we will make the
appropriate infrastructure adjustments to improve profitability," said
Weiss.
About StorageTek
StorageTek is the preeminent provider of network storage. The company's
strategy is to provide "Open, Intelligent and Integrated" solutions
that combine storage products, storage management software and storage
services. StorageTek solutions help customers collect, move, store,
share and protect all types of digital content on platforms ranging from
laptops to enterprise servers. The company, with headquarters in
Louisville, Colo., reported revenue of $2.3 billion in 1998. Information
on StorageTek is available on the World Wide Web at www.storagetek.com
or phone 1 800 786-7835.
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TRADEMARKS: StorageTek, Virtual Storage Manager, VSM and "Open,
Intelligent and Integrated" are trademarks of Storage Technology
Corporation. All other products or company names mentioned are used for
identification purposes only, and may be trademarks of their respective
owners. |
