UK-based data storage solutions provider Xyratex Ltd (XRTX), on Tuesday reported a bigger-than-expected decline in third-quarter profit, hurt by a sharp decline in sales, coupled with a rise in selling, general, and research expenses.
Moving forward, the company provided a weak outlook for the fourth quarter. Investors were dismayed by the results and shares of the company touched a new low for the year, losing over 14 percent in after-hours trade on the Nasdaq.
Xyratex's weak quarterly results were quite expected as the company last month said revenues will be impacted on reduced demand from a number of large OEM customers at its Enterprise Data Storage Solutions segment. It also cited technical issues related to its latest Capital Equipment and High Performance Computing products.
Xyratex reported third-quarter net income of $7.7 million or $0.28 per share, compared to $9.7 million or $0.32 per share in the prior year.
Excluding items, adjusted income for the quarter was $10.3 million $0.37 per share, compared to $12.7 million or $0.42 per share in the year ago period.
On average, five analysts polled by Thomson Reuters expected the company to earn of $0.44 per share for the third quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter were down by 24% to $275.67 million from $361.84 million for the same quarter last year.
Five analysts had a consensus revenue estimate of $316.33 million for the quarter.
Looking ahead to the fourth quarter, the company expects revenues between $235 million and $285 million, and loss, excluding items, of between $0.43 and $0.15 per share.
Analysts currently estimates earnings of $0.49 per share and revenues of $327.90 million for the fourth quarter.
The company has announced a quarterly cash dividend of $0.075 per share, payable on October 30 to shareholders of record as on October 16.
During the quarter the company repurchased 892,922 of its common shares at a total cost of $10.0 million.
Shares of Xyratex Ltd closed at $8.70, down 49 cents or 5.33%, on a volume of 1.3 million shares on the Nasdaq. In after hours, the stock lost $1.28 or 14.71% at $7.42. In the past year, the stock has traded in a range of $8.84 - $17.96.
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