Updated from June 8
Storage Technology (STK - Get Report) will not meet Wall Street's top-line expectations for the second quarter, the company said after the closing bell on Thursday. Still, in a dramatic reversal of recent postwarning trends, StorageTek shares were sharply higher Friday.
In recent trading, shares of the Louisville, Colo., storage vendor were up $2.45 cents, or 9.7%, to $27.70. Although Goldman Sachs and Credit Suisse First Boston each cut earnings estimates Friday morning, traders said the shortfall was largely expected, given the myriad warnings in the prior week.
Total revenue, the company said, will range from $510 million to $520 million and net income is expected to be between 29 cents and 33 cents diluted earnings per share. Analysts polled by Thomson First Call were expecting sales of $549.44 million and a profit of 32 cents a share. StorageTek, as the company is usually called, does not give quarterly guidance to investors."This is not the quarter that we had expected to deliver. We experienced an unexpected but definite decline in order flow during the last two weeks of the quarter," CEO Patrick J. Martin said in a prepared statement. Martin noted that a number of other companies, particularly in enterprise software, also found it difficult to close deals in late June; notable examples include PeopleSoft (PSFT) and BMC Software (BMC). Separately, the company authorized an increase in stock repurchase of up to $500 million of common stock. StorageTek produces backup products, including tape-based products, that account for nearly half of the company's revenue. It competes with IBM (IBM - Get Report), Hewlett-Packard (HPQ - Get Report) Quantum (DSS - Get Report) and others. StorageTek will announce second-quarter results after the market closes on July 20.