Quantum Pares Back Forecast

Quantum Corp. (NYSE: DSS) said today that a number of factors were likely to drag down its results for its second fiscal quarter, which ended on September 28 (see Quantum to Take Q2 Charges).

For starters, the company said that it had recognized nearly $39 million in various accounting charges during the quarter. Among the charges was $21.3 million for net deferred tax assets, about $6 million related to one of the companys facilities, and $4.8 million in acquisition-related charges.

The company said that these charges would probably help contribute to a much greater loss per share than expected. Quantum, which had previously said it expected to report a loss per share of between 5 and 7 cents, now says it will most likely report a loss of 23 cents a share. Analysts polled by Thomson First Call had expected the company to report a loss of 2 cents a share.

And that may not be the end of it. “It’s possible that there could be other charges,” Michael Lambert, executive VP and CFO of Quantum, said on a conference call following the announcement.

While the charges are certainly hurting the tape giant’s results, they may be the least of its worries. The company also said today that, mainly due to continued pressure on media cartridge pricing, it expects to announce weaker revenue and tighter gross margins for the quarter than previously expected. Quantum now expects to post total revenue between $190 and $200 million, and gross margins of 29 percent.“We’re seeing a continued erosion in prices, especially in our tape products,” Rick Belluzzo, Quantum’s chairman and CEO, said on the call, insisting that this is an industry-wide problem. “This is across a variety of formats… not only for our products.”

Salvation for Quantum’s suffering, according to one industry analyst who did not want to be identified, could possibly lie in the company’s new SuperDLT 600 product. “This is really critical for the company to reverse its market-share issues with LTO,” the analyst says. “This is the real crux for Quantum.”

— Eugénie Larson, Senior Editor, Byte and Switch