SEATTLE (AP) ¿ Digital-storage company Isilon Systems Inc. said Monday it expects a first quarter loss, steeper than Wall Street anticipates, and plans a 10 percent work force cut to reduce costs by about $4 million a year.

Shares of the Seattle company fell sharply for a second straight trading session, following criticism from analysts Friday that the company's 2008 outlook lacked clarity. Its shares declined 31 cents, or 12.7 percent, to $2.14 in midday trading.

The company said it expects a loss of between 16 cents per share and 17 cents per share including items for the period ended March 31. It expects earnings before items between 14 cents per share and 15 cents per share.

Both estimates include a non-cash inventory write-down of about $3.8 million, or 6 cents per share.

Analysts surveyed by Thomson Reuters expect a quarterly loss of 12 cents per share. These estimates typically exclude items.

Isilon anticipates revenue of $26.5 million to $27 million, up from a year ago but down sharply from the fourth quarter. Analysts were looking for revenue of $27.4 million.

The company attributed the write-down to "softening economic conditions" in the first quarter and lower demand forecast for products because of anticipated shifts to a new group of products it announced last month.

"It's clear that persistent global economic weakness and uncertainty has led to contraction in many of our customers' IT budgets," Chief Executive Sujal Patel said.

The company did not say how many jobs are at stake. It said in a statement that it expects to take a charge of $850,000 on the staff reduction in the second quarter. A message seeking further details was left with a spokesman.

Isilon, founded in 2001 by Patel, has fewer than 400 employees, according to financial-information service CapitalIQ.

Isilon also said it named George Bennett senior vice president of worldwide field operations, responsible for sales and support organizations. Bennett, who most recently served as a senior vice president at San Jose, Calif.-based Quantum Corp., succeeds Steve Fitz, who held the job from April 2007 to this month.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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