) reported first quarter 2013 adjusted loss per share of 5 cents
per share, which was in line with the Zacks Consensus Estimate. The
adjusted or non-GAAP earnings per share exclude amortization of
acquisition-related intangible assets, but include stock-based
compensation expense. The quarter's earnings dropped 223.2% from
the year-ago level.
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Total revenue for the first quarter was $140.9 million, down 8.2%
on a year-over-year basis. The lackluster performance was due to
feeble performances by all the operating segments. A challenging
macroeconomic situation in Europe and less number of large deals
led to the weak result.
Year over year, Product revenue decreased 8.3% to $93.8 million,
Service revenue decreased 1.7% to $36.1 million, and Royalty
revenue decreased 24.6% to $11.0 million.
Despite the miss, the company noticed demand ramp up for its
StorNext software and appliances and DXi disk-based data protection
Reported gross margin in the quarter was 39.6%, down from 41.2% in
the year-ago quarter.
Operating margin was (10.5%) versus (1.1%) in the year-ago quarter.
The company's total operating expenses increased 8.7% on a
year-over-year basis. Higher operating expenses were mainly due to
15.6% and 4.9% year-over-year increases in selling and marketing,
and general and administrative expenses, respectively. This was
partially offset by a 0.2% decline in research and development
Net loss on a GAAP basis was $17.5 million or 7 cents per diluted
share compared with $5.2 million or 2 cents in the year-ago
Excluding the amortization of acquisition-related intangible assets
but including stock-based compensation expense, adjusted net loss
for the first quarter was $12.9 million or 5 cents per diluted
share compared with net income of $0.5 million or break-even in the
Cash, cash equivalents and restricted cash were $50.2 million
versus $55.5 million in the previous quarter. Long-term debt
remained unchanged sequentially at $49.5 million. Quantum used $1.1
million cash from operating activities and invested roughly $4.0
million in purchasing property and equipment.
Management asserted that it will continue to enhance its product
portfolio and focus more on increasing brand value.
For the second quarter, management expects revenue in the range of
$150.0-$155.0 million, GAAP gross margin of 41.0% and non-GAAP
gross margin of 42.0%. GAAP operating expenses are expected in the
range of $70.0-$72.0 million, while non-GAAP operating expenses are
expected between $64.0 million and $66.0 million. The company also
expects interest expense of $2.0 million and tax provision of $1.0
The company did not provide any earnings guidance. The Zacks
Consensus Estimates for second quarter and fiscal 2013 are pegged
at 2 cents and 4 cents loss per share, respectively.
Quantum first quarter loss per share matched our Zacks Consensus
Estimate. However, Quantum provided an upbeat second quarter
revenue guidance irrespective of its dismal first quarter
performance, reflecting decent sequential comparison.
Though the company's commentary on its product strategy is
encouraging, persisting Euro concerns, high debt burden and intense
) pose challenges.
Currently, Quantum has a Zacks #4 Rank, implying a short-term Sell