Maxtor Swings to a Loss
Updated from 11:21 a.m. EDT
Weighed down by charges, Maxtor (MXO) swung to a loss in the first quarter, and was promptly pummeled by Wall Street.
The hard-drive maker posted revenue of $1.07 billion, up from $1.02 billion a year ago. But charges, including $13.9 million for severance payments to laid-off workers in the U.S. and Singapore and $4.9 million related to the termination of a product line, pushed the company to a GAAP loss of $24.2 million, or 10 cents a share. A year ago, Maxtor posted a profit of $8.9 million, or 3 cents a share.
Analysts polled by Thomson First Call had predicted an 8-cent-a-share loss on revenue of $989.3 million. But Maxtor argues that the pro forma First Call estimates don't include the charges; backing them out, said spokesman Alan Bernheimer, yields a loss of just 2 cents a share, significantly better than consensus.A check of analyst postings Thursday morning yields a variety of opinions; some analysts agreed with the company and backed out all $18.8 million in charges for a 2-cent loss, while others only backed out the severance charge, yielding a 4-cent loss. Sell-side analysts were generally positive about the quarter, but a comment by CIBC analyst Matthew Smith illustrates Wall Street's guarded view of the company: "We maintain a cautious stance on MXO shares after 1Q05 results. While we see further margin improvement in 2Q05, a return to full profitability remains a '06 event, in our view," he wrote. CIBC does not have a current investment banking relationship with Maxtor. In recent trading Thursday, Maxtor shares fell 41 cents, or 8.3%, to $4.56.
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