) reported fourth quarter fiscal 2013 adjusted loss per share of
4 cents, wider than the Zacks Consensus Estimate of 3 cents loss
per share. The adjusted loss per share excludes amortization of
intangible assets and restructuring charges, but includes
stock-based compensation expense.
Total revenue for the fourth quarter was $140.0 million, down
12.7% on a year-over-year basis and 5.4% from the Zacks Consensus
Estimate. The year-on-year decline in revenues was due to
weaker-than-expected sales of branded tapes, partially offset by
higher sales of disk system and software.
Year over year, Product revenues decreased 15.7% to $92.6
million; Royalty revenues decreased 25.8% to $10.4 million while
Service revenues grew 1.3% to $36.9 million.
During the quarter, Quantum acquired approximately 110 new
mid-range and enterprise tape customers, which brought the total
to roughly 550 new customers at the end of fiscal 2013.
Reported gross margin in the quarter was 41.2%, marginally up
from 40.7% in the year-ago quarter due to better cost management.
Operating loss margin was (8.8%) versus (4.4%) in the year-ago
quarter. The company's total operating expenses decreased 3.3% on
a year-over-year basis but were higher as a percentage on total
revenue. Research and development expenses decreased 9.6%, sales
and marketing expenses dipped 6.2% and general administrative
expenses fell 4.1%.
Net loss on a GAAP basis was $14.5 million or 6 cents per share
compared with net loss of $11.1 million or 5 cents in the
year-ago quarter. Excluding one-time items but including
stock-based compensation expense, adjusted net loss for the
fourth quarter was 4 cents per share compared with loss of 1 cent
in the year-ago quarter.
Balance Sheet & Cash Flow
Quantum generated $16.0 million in operating cash, up from $6.0
million in the prior quarter. Cash, cash equivalents and
restricted cash were $72.0 million versus $54.9 million in the
previous quarter. There was no long-term debt.
Management affirmed that it will continue to introduce new
products and focus more on increasing brand value.
For the first quarter of 2014, management expects revenues to be
in the range of $135.0-$140.0 million. The sequentially weak
revenue guidance was due to typical seasonality but the company
expects better revenues from disk systems and software. This
apart, the company expects GAAP gross margin in the range of
41.3%-42.3% and non-GAAP gross margin in the range of
42.0%-43.0%. The company expects GAAP operating expenses to range
between $64.9 million and $66.9 million. Non-GAAP operating
expenses are likely to be in a range of $60.0 million to $62.0
For fiscal 2014, management expects revenues in the range of
$610.0-$630.0 million. GAAP and non-GAAP gross margin will be in
the mid-40.0% range, with non-GAAP gross margin approximately 60
basis points higher than GAAP gross margin. This apart, the
company expects GAAP operating expenses to range between $264.5
million and $269.5 million. Non-GAAP operating expenses are
likely to be in a range of $245.0 million to $250.0 million. GAAP
earnings per share are expected within (5 cents) to 0. Non-GAAP
earnings per share are expected to range between 5 cents to 10
Quantum's fourth quarter was disappointing with both the top and
bottom lines missing the Zacks Consensus Estimate. Year-over-year
comparisons were dismal too. Quantum's first-quarter guidance was
weak citing seasonality and lower revenues from OEM and branded
tapes. However, solid momentum in disk systems and software
revenues could turn the tables.
Further, we are encouraged by the new product launches during the
quarter, which could become key drivers for growth, given the
increasing need for data security and big data management.
The company is facing intense competition from
) as they are slowly tightening their grip on the market. Though
the company's commentary on its product strategy is encouraging,
persisting Euro concerns and a high debt burden make us a little
apprehensive about the stock.
Currently, Quantum has a Zacks Rank #3 (Hold).
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