StorageTek Reports Record Yearly Revenue
Business Wire - January 21, 1999 16:28
LOUISVILLE, Colo.--(BUSINESS WIRE)--Jan. 21, 1999--
Fourth-Quarter Results In Line With Previous Guidance
StorageTek(R) (Storage Technology Corp., NYSE:STK) today reported fourth-quarter net income of $52.6 million or $.52 diluted earnings per share.
For the same period a year ago, the company reported net income of $83.7 million or $.73 diluted earnings per share. Revenue for the fourth quarter ended Dec. 25, 1998, was $660.0 million compared to $663.9 million for the previous year.
Net income for the full year of 1998 was $198.2 million compared to $231.8 million for 1997. Diluted earnings per share for 1998 were $1.86 compared to $1.89 for 1997. Revenue for 1998 was $2.26 billion, compared to $2.14 billion for 1997.
"Fourth-quarter results were in line with previous guidance and we have entered the new year in an excellent position. This is due to strong customer acceptance of our new 9840 tape drive, the new Virtual Storage Manager(TM) (VSM(TM)) system, client-server tape library solutions and software products," said David E. Weiss, StorageTek chairman, president and chief executive officer.
"For the year, revenue increased in several key areas," said Weiss. "The client-server area of our tape library sales increased more than 70 percent in 1998 to $277 million and we continue to expand our market leadership in this product category. During the fourth quarter, we announced an OEM relationship with Dell Computer Corp. and a reseller agreement with Silicon Graphics Inc., two more indicators of the broad market acceptance of our client-server tape libraries. Overall, however, tape sales revenue was flat for the year, primarily as a result of the delays in availability of the 9840 and VSM, milestones that are now behind us.
"Our disk sales revenue grew 11 percent in 1998 to $526 million, with the highest growth rate in the client-server area. Disk terabyte shipments more than doubled for the year," said Weiss. "Our services business grew 8 percent for the year on the strength of increased sales of multi-vendor support services.
"New applications continued to drive storage demand and revenue during 1998," Weiss noted. "StorageTek provides vertical solutions for scientific applications, check-image archive, digital media and medical imaging. We also offer solutions for two horizontal applications -- document management and data warehousing. The explosive growth of storage is being fueled by these myriad uses, and our hardware, storage management software and service offerings place us at the forefront of providing these new solutions.
"The advent of storage area networks (SANs) represents a major change in the way customers will purchase storage in the future, and our open, intelligent and integrated approach to SANs provides us with a unique position in the industry. We recorded first revenue for this business area during the fourth quarter and believe we are the only vendor delivering complete SAN solutions today," said Weiss. "We plan to extend our leadership in the years ahead.
"A transition to our new 9840 and VSM products delayed growth in Nearline(R) and client-server tape during 1998, but these products are positioned for rapid growth in 1999. The speed at which we can ramp sales of the Virtual Storage Manager system and the 9840 tape drive will be major factors in how fast we will grow this year," said Weiss. "We are nearing completion of our agreement with MKE-Quantum Components and Quantum Corp. that includes hiring approximately 60 new employees, purchasing fabrication equipment and leasing 27,000 square feet of manufacturing space. This agreement will enable us to effectively double our production capacity for 9840 read/write heads.
"Automation continues to provide exceptional value for customers," said Weiss. "We added more than 1,100 new large tape libraries and nearly 5,000 small tape libraries to our installed base during 1998. The total installed base of tape libraries is nearing 20,000."
Robert S. Kocol, StorageTek corporate vice president and chief financial officer, said, "Total revenue for 1998 grew 5 percent, including product sales growth of 4 percent and service revenue growth of 8 percent. We continued to manage margins and expenses well, resulting in slight increases in operating profit and gross margins for the full year. In addition, we will continue to manage working capital in conjunction with our anticipated growth."
Kocol noted several variables that will be key to the company's success in 1999. "First, we are looking for significant growth in the client-server portion of our tape and disk product lines," said Kocol, "as the UNIX and NT markets continue to expand rapidly. Second, our continued success in marketing new storage solutions will be key to growth in tape, disk, software and professional services. A third important factor for us will be our drive to expand distribution of enterprise disk in 1999 to include significant direct sales of an open version of our virtual array technology."
Earlier this month, the company executed a new, one-year unsecured $150 million revolving credit agreement that supplements its existing $350 million revolving credit agreement and ensures adequate financing for a strong launch of new products.
StorageTek's annual meeting will be held at 10 a.m. (CDT) May 20, 1999, at the Hilton Hotel and Towers in Minneapolis, Minn.
StorageTek is the preeminent provider of network storage. The company's products and services are used to store, transport and secure more than 100 petabytes of the world's information, ranging from mainframe data to client/server applications to video, audio and still images. Information on StorageTek is available on the World Wide Web at storagetek.com or phone at 1-800-STORTEK.
The assumptions, expectations and forecasts contained herein regarding StorageTek's future plans, financial results and performance may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties that could cause actual results to differ materially as discussed in StorageTek's reports on Forms 10-K, 10-Q and 8-K that are filed with the Securities and Exchange Commission (SEC).
TRADEMARKS: StorageTek and Nearline are registered trademarks of Storage Technology Corporation. Virtual Storage Manager and VSM are trademarks of Storage Technology Corporation.
marketwatch.newsalert.com |
