Shares of Silicon Graphics International Corp. (SGI) plunged 12 percent in extended trading on Wednesday after the computing and storage solutions company provided significantly weak guidance for the fourth quarter, and slashed its outlook for the full-year 2012.
However, the company reported a loss for the third quarter that narrowed from last year, reflecting double-digit revenue growth, partially offset by lower margins and higher operating expenses. Both adjusted earnings per share and quarterly revenues came in higher than analysts' expectations.
In late February, the company appointed Jorge Luis Titinger as its new president and CEO. Titinger bought in more than 25 years of relevant industry experience. Titinger replaced Mark Barrenechea, who resigned from he positions on 2012 new years day.
"Since joining SGI, I have been working with management and the Board conducting a thorough review of the company's business and operations. It is clear to me that SGI is in the right markets with the right products," Titinger said in a statement.
The company also named Robert Nikl as SGI's executive vice president and chief financial officer effective on May 15, 2012.
The Fremont, California-based company reported a net loss of $1.16 million or $0.04 per share for the third quarter, narrower than $1.67 million or $0.05 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter increased to $3.66 million or $0.11 per share from $2.28 million or $0.07 per share in the year-ago quarter.
On average, 3 analysts polled by Thomson Reuters expected the company to report a loss of $0.03 per share for the third quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter grew 39 percent to $199.39 million from $143.66 million in the same quarter last year, and topped three Wall Street analysts' consensus estimate of $189.90 million.
Gross margin for the quarter contracted 236 basis points to 25.8 percent from last year. Total operating expenses increased to $53.0 million from $44.35 million last year.
Looking ahead to the fourth quarter, the company expects an adjusted net loss in a range of $0.52 to $0.37 per share, on anticipated revenues between $177 million and $197 million. Analysts currently expect the company to report earnings of $0.16 per share for the quarter, on revenues of $208.87 million.
For fiscal 2012, SGI now anticipates adjusted loss in a range of $0.30 to $0.15 per share, on projected revenues between $750 million and $770 million. Street is currently looking for full-year 2012 earnings $0.24 per share on annual revenues of $772.90 million.
Earlier, the company projected adjusted earnings in the range of $0.15 to $0.30 per share on revenues between $770 million and $800 million.
The company noted that it will now begin issuing quarterly guidance rather than annual guidance from the first quarter of fiscal 2013.
"In the coming months, we will finalize SGI's long-term strategic plan with the goal of driving profitable growth. While we will continue to invest in technology innovation and differentiation, we will also seek ways to streamline our operations and add more rigor to our processes," Titinger added.
SGI closed Wednesday's regular trading session at $9.09, up $0.38 or 4.36% on a volume of 1.04 million shares. However, the stock plunged $1.09 or 11.99% in after-hours trading.
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