new management team told investors to expect a solid fourth quarter in a midquarter update, but provided few details of its turnaround plan for the troubled hard-drive maker.
Wall Street's reaction was mixed; the stock jumped in after-hours trading following the announcement Wednesday evening, but then slipped on Thursday. In recent trading, shares were off 22 cents, or 4.4%, to $4.78.
The best news of the update was on the top line. Fourth-quarter revenue is now expected to range from $980 million to $1.01 billion, compared to earlier guidance of $920 million to $950 million. Excluding a one-time $9 million charge related to severance payments and other matters, the company expects to lose $42 million to $44 million, or 17 cents to 18 cents a share, compared to early guidance of a loss of 18 cents to 22 cents a share.
Analysts polled by Thomson First Call were expecting a loss of 20 cents a share on sales of $935.17 million.
Maxtor's executive suite has been equipped with the proverbial revolving door this year: The company has had four chief financial officers, changed CEOs and brought in a new president during the past year. The new lineup is heavy with industry, and it includes Chairman C.S. Park; Michael Wingert, a long-timer Maxtor executive who returns to the company as president and chief operating officer; and CFO Duston Williams, a former chief financial officer of rival hard-drive maker
Despite a rally that has seen the stock appreciate about 70% since late October, shares of Maxtor are still off 55% this year, while rival
is off just 10%.
The company will report final fourth-quarter and annual results on Feb. 3, a few weeks later than normal because of extra work needed to comply with provisions of the Sarbanes-Oxley Act mandating that the company report on internal controls.
Several analysts said management was light on details of its turnaround plan, but noted that it has only been in place for a few weeks, and appeared to understand the company's problems. In particular, Maxtor needs to become more cost competitive, a difficult task because it lacks the vertical integration of some of its rivals.