Storagetek issued a profit warning on Thursday and said it would begin to cut its workforce by 500 staff.
The storage company said it expects total revenue and net earnings to fall way below the $0.39 to $0.46 earnings per share range expected by analysts polled by First Call. It does not expect net earnings to be more than between $0.05 and $o.10 a share.
The company blamed the "slower than expected acceptance" of its Virtual Storage Manager (VSM) storage software technology as well manufacturing problems related to the 9840 tape drive.
David Weiss, chairman, president and chief executive, said: "We must address both short term tactical issues and longer term strategic expense issues. The tactical problems are represented in the revenue and margin shortfalls from the 9840 tape drive and VSM system. I believe the revenues from these programmes will improve throughout the year."
Weiss said he wants to shed more than 250 employees from the company's staffing levels by the end of the second quarter under a voluntary programme. This is part of a wider scheme to cut the workforce by 500 which will save the company $40 million a year.
The job cuts will cost the company between $20 million and $25 million in charges during its fiscal second quarter.
Despite this, Weiss expects the first quarter revenue growth will be slightly higher than the five per cent growth in 1998.
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