Shares of data center equipment maker Silicon Graphics (SGI), which were initially halted this afternoon, have plunged $3.56, or 25%, to $10.81 following the resumption of trading, after the company missed fiscal Q2 EPS estimates by a mile and forecast the year’s profit below consensus as its gross profit margin took a hit.
Revenue in the three months ended in December rose 10%, year over year, to $195.2 million, yielding EPS of 4 cents, excluding some costs.
Analysts had been modeling $197 million and 25 cents a share.
For the year, the company sees revenue in a range of $770 million to $800 million, ahead of the consensus $756 million. However, EPS is expected in a range of 15 cents to 30 cents, well below the average 67-cent estimate.
Interim CEO Ron Verdoom said the company’s gross profit margin fell 2.8 percentage points to 26.7% because of weakness in Europe and a less favorable mix of products sold:
Our overall gross margin was adversely affected by challenging economic conditions in Europe and the high cost of doing business there. We are taking decisive action to align our business for sustainable profitable growth and are planning to restructure our European operation. Other contributing factors to the decline in margin, the transition of our service margin profile and the change in product mix are temporary.
No comments:
Post a Comment