Updated from 1:23 p.m. EDT
, which has wrestled with the loss of several executives in recent months, marched back to profitability in the latest quarter and surpassed Wall Street's earnings estimates.
The maker of information storage devices said its second-quarter profit reached $8.7 million, or 9 cents a share, before restructuring charges, beating analysts' forecast of 5 cents a share, according to
First Call/Thomson Financial
After jumping from a sinking stock all year, investors reacted positively to the results Monday. Storage Technology shares climbed 2 3/4, or 27%, to close at 21 7/8.
The Louisville, Colo.-based company attributed the results in part to an improvement in gross margins and better control of operating expenses. Storage Technology also predicted that revenue would increase in the second half of this year as new products are introduced, and the company's new chief, Patrick J. Martin, said the promising signs are "only the beginning."
Taking into account the restructuring move, which cut the company's work force by 1,250 jobs and led to a pretax charge in the latest quarter of $12.4 million, the company reported earnings of $651,000, or one penny a share. Those figures contrast with a net loss of $38.5 million, or 38 cents a share, including one-time charges, in the comparable period last year.
However, revenue in the second quarter fell 22% to $513 million as the company scrambled to fill a void left by
, a customer that generated roughly 10% of Storage Technology's revenue in 1999 and 20% of revenue a year before that, Robert S. Kocol, the company's chief financial officer, said in an interview.
IBM last year unveiled its own data storage technology, ending its reliance on Storage Technology. The decision made a significant dent in the latest results, Kocol noted, contributing to a 67% cut in disk products revenue. "If you go back a few years, it was a win-win situation for both of us," Kocol added. "This year that relationship is gone."
The restructuring effort -- still expected to lead to a third-quarter charge of $5 million -- should ultimately save the company $100 million this year, the company maintained. The task of boosting revenue and slashing costs, however, remains a challenge.
"In my first three weeks as CEO, I have seen great technology, dedicated people and solid customer relationships," Martin said in a statement. "However, it is clear we must make further progress in our overall execution."
named Martin, a former
executive, its new chairman, president and chief executive earlier this month. Martin replaced David E. Weiss, who had occupied those positions for four years.
Weiss stepped down with the company's chief operating officer, Victor Perez, after the company warned in February that it would post a fourth-quarter 1999 loss. The company had
struggled through a string of lackluster quarters.