StorageTek posted a fourth quarter loss on Thursday in line with last week's profit warning.
It attributed the shortfall for its second poor quarter in a row to lower margins on its consulting and integration services, the impact of the Year 2000 lockdown within its customer base, and operating expenses associated with the addition of a week to its fiscal calendar quarter.
Other factors included increases in its regular end of year sales bonus and commission expenses.
The company, which makes data storage and retrieval systems, saw revenue fall 5.7 per cent to $622.6 million for its fourth quarter. It also announced a loss of $25.8 million or $0.26 per share on a fully diluted basis. This compares with earnings of $52.6 million or $0.52 per diluted share for the fourth quarter of the previous year.
These results include charges of $5 million in litigation costs and $6.93 million in restructuring charges. If the charges are excluded, however, losses would have come to $0.10 per share, which the company forecast last week.
Before last week's announcement, the First Call analysts' consensus estimate had expected StorageTek to make a profit of $0.05 per share.
But David Weiss, Storagetek's chief executive, who resigned when the company issued its profit warning last week, said that it expected to generate a profit next year.
"StorageTek has taken the strategic decision to commit fully to the three core competencies where we have done well in the past and see the best opportunity for profitable growth in the future: Tape Automation, Virtual Storage, and Storage Area Networks," he attested.
"Our restructuring activities, from the realignment into the client-server and enterprise business groups, to our renewed go-to-market strategies domestically and globally, are focused on the objective of gaining market share and revenue growth," he added.
Putting a positive spin on the news, the supplier also noted that total revenues for fiscal 1999 rose five per cent on the previous year to $2.37 billion. It also added that, if businesses it plans to discontinue during the coming year were excluded from the figures, sales grew by 15 per cent.
The businesses include low margin consulting and integration units and its IBM channel division, which will be closed following the break-up of its alliance with Big Blue.
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