NEW YORK (TheStreet) -- Shares of Quantum (QTM) - Get Report were falling 25.29% to $1.27 Thursday, after the data storage solutions company warned that it expects lower revenue in the fiscal first quarter than it previously forecast.
Quantum said it now expects to report revenue of $111 million for the fiscal first quarter, below its previous guidance of $125 million to $130 million. Analysts expect the company to report revenue of $128.39 million for the quarter.
The company said that growth in its scale-out storage and services revenue was offset by "product and related service revenue declines of approximately $15 million in branded tape automation, $7 million in branded devices and media and $6 million in OEM tape sales."
The lower-than-expected revenue was largely due to overall weakness in the general-purpose storage market, Quantum said. The company noted that other companies in the sector made similar announcements in recent weeks.
"We're pleased with our continued growth and momentum in scale-out storage but found the overall storage environment particularly challenging toward the end of the quarter," President and CEO Jon Gacek said in a statement.
"Most notably, the market for data protection in IT data centers was especially soft, as customers seemed to pull back on planned purchases and pricing for low-margin devices and media was under significant pressure," Gacek continued.
Separately, TheStreet Ratings team rates QUANTUM CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUANTUM CORP (QTM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- QUANTUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QUANTUM CORP turned its bottom line around by earning $0.05 versus -$0.09 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus $0.05).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 189.6% when compared to the same quarter one year prior, rising from -$14.40 million to $12.91 million.
- 43.47% is the gross profit margin for QUANTUM CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, QTM's net profit margin of 8.73% significantly trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Net operating cash flow has significantly decreased to -$5.08 million or 125.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: QTM Ratings Report