Storage Stocks Facing Pressure

Updated from March 5

The storage sector faced more pressure Wednesday after McData (MCDT Quote) lowered guidance and EMC(EMC Quote) had its earnings estimates cut by a brokerage.

McData said it expects revenue of $73 million to $78 million in the first quarter, compared with previous guidance of $85 million to $95 million, citing a reluctance among customers to spend. As a result, the company now expects a loss of 2 cents to 4 cents a share, excluding noncash deferred compensation and amortization charges. The company had been expecting to break even, or even post a profit of as much as 2 cents a share.

According to Thomson Financial/First Call, analysts are expecting earnings of 2 cents per share and revenue of $91 million. In the same quarter a year ago, the company earned 8 cents on revenue of $83 million. ...