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Xyratex Plummets After Beating Estimates, Disappointing Guidance (XRTX)

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Xyratex (NASDAQ: XRTX) is down more than six percent in after hours trading after announcing its third-quarter results and fourth-quarter expectations.

The company posted a Q3 EPS of $0.21 versus the Wall Street estimate of $0.05, beating by $0.16.

Despite the apparent win on Wall Street, Xyratex's earnings per share were down 43 percent from the year-ago period.

Revenue came in at $217.3 million versus the Street estimate of $209.31 million. Sales were down 21 percent year-over-year.

Xyratex anticipates that it will report a Q4 EPS between $(0.04) and $0.20 versus the Street estimate of $0.16.

"Our third quarter results were at the higher end of our expectations, reflecting lower overall expenses and approximately $5 million of revenue from the HDD Capital Equipment business which had previously been planned for the fourth quarter," Ernie Sampias, CEO of Xyratex, said in a company release.

"I am encouraged by the improvements in our customer relationships and our investments in technology, specifically around cloud and flash, and the opportunities that I believe will be created as a result. In our Enterprise Data Storage Solutions business, we recently introduced our 12Gb/s SAS technology into our Onestor line of enterprise class modular storage enclosure. This first-to-market technology has recently been accepted as the next generation technology by one of our significant Tier 1 customers, which is a significant opportunity for Xyratex.

"Within our Clusterstor product line, we achieved a number of design wins during the third quarter in vertical markets including academia, oil and gas and the financial sector. Our HDD Capital Equipment business continues to work very closely with our HDD partners. I am encouraged with the opportunities that are being created as a result of these partnerships such as technologies that support higher capacity HDDs."

Investors must have had high hopes for Xyratex, as it closed up more than seven percent this afternoon.

Year-to-date, the stock has risen more than 29 percent.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: Ernie Sampias xyratexEarnings News


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