Legato Drops on Poor Report
Ronna Abramson
07/23/02 - 04:30 PM EDT
Shares of
Legato Systems plummeted Tuesday after the storage
software maker reported second-quarter results that were slightly short of
Wall Street estimates.
Shortly before the close of trading, Legato was down 77 cents, or 20.5%, to $2.98.
Mountain View, Calif.-based Legato reported a net loss according to
generally accepted accounting principles of $45.9 million, or 45 cents a
share, in the second quarter. That compares to a net loss of $10 million,
or 11 cents a share, in the same period a year ago and a net loss of $46.7
million, or 52 cents a share, in first-quarter 2002.
Excluding items, Legato posted a pro forma net loss of $7.6 million, or
7 cents a share, compared to a net loss of $2.1 million, or 2 cents a
share, for the year-ago period and a net loss of $5.7 million, or 6 cents a
share, in the first quarter of 2002.
That loss was a penny greater than the 6 cents a share pro forma net
loss expected by analysts surveyed by Thomson Financial/First Call.
Second-quarter revenue dropped 1.4%, to $61.6 million, from $62.5 million
for the year-ago period, but rose 10.8% sequentially from $55.6 million in
the first quarter.
Analysts were expecting revenue of $58.1 million, but that number did
not include approximately $5.6 million in revenue recognized by Legato from
its recent acquisition of OTG. Deducting that figure from Legato's
reported revenue brings it down to $56 million -- about $2 million shy of
the consensus estimate.
In addition to that slight shortfall, Punk, Ziegel & Co. analyst Steve
Berg said he thought the market was reacting to the 62% drop in Legato's
cash balance to $55.4 million from $145.7 million on Dec. 31, stemming from
the payout of a lawsuit settlement. "Put all of those things together and
you've got lackluster [results]," said Berg, who has a market perform
rating on Legato. His firm hasn't done any banking with the company.
In a press release, CFO Andy Brown said the company expects to narrow
its loss in the third quarter on revenue ranging from $65 million to $70
million. The consensus estimate for the third quarter called for Legato to
register a pro forma loss of 3 cents a share on $63.1 million in revenue.
Chairman and CEO David B. Wright said the company is poised to return
to profitability by the end of the year. Analysts were expecting Legato to
lose a penny a share in the fourth quarter.
