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Fusion-io Hit by Round of Downgrades After Weak Guidance

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Fusion-io (NYSE: FIO) plummeted on Thursday following the release of the company's second quarter earnings. The company lost in excess of 20 percent of its market value immediately following results.

The company beat consensus expectations on both top- and bottom-lines, posting earnings per share of $0.13 compare to an $0.08 estimate. Revenue came in at $120.60 million, more than the $119.92 million estimate.

However, guidance was terrible. Fusion-io cut its revenue forecast by 42 percent to $80 million.

The company's key accounts are Facebook (NASDAQ: FB) and Apple (NASDAQ: AAPL), which combined make up over half of Fusion-io's shipments. Both customers reduced their orders.

The news was not received positively by the sell-side; most analysts downgraded the company, including those at Credit Suisse, JP Morgan and Piper Jaffray. Analysts across the board appeared to be skeptical of the company's ability to maintain its first-mover advantage in server flash. "We are somewhat concerned this 6 month deferral could provide ample time for the competition to improve their products," noted Piper Jaffray in their downgrade.

In a bold move, Lazard Capital Markets took the contrarian view, upgrading the company from Hold to Buy.

Edward Parker, the analyst behind the issued report, noted that the "lumpiness" in shipments was "a fundamental aspect of the business", and that after last night's negative surprised, the story remains little changed. "Customer concentration finally reared its ugly head and as a result, numbers are moving lower. However, we believe this business has truly been deferred and will resume in the second half of the calendar year, if not earlier. The revenue opportunity with large scale-out data centers remains substantial," Mr. Parker commented in the report.

Fusion-io's challenging outlook is the latest in a string of disappointing guidances among its peers. At the time of writing, shares traded at $17.00, some 15.4 percent down from yesterday's close and below the company's IPO debut back in September of 2011.

DISCLOSURE: The author of this article owns a long position in Fusion-io. The views expressed herein are the author's own opinions, and are not to be construed as investment advice.

Latest Ratings for FIO

Jul 2014Monness Crespi HardtTerminatesNeutral
Jun 2014Credit SuisseDowngradesOutperformNeutral
Jun 2014NeedhamDowngradesBuyHold

View More Analyst Ratings for FIO
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Posted-In: Analyst Color Earnings News Guidance Upgrades Downgrades Intraday Update Analyst Ratings


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