What happened
Shares of Quantum (QMCO 5.76%) were tumbling today after the data-storage specialist badly missed estimates in its fiscal third-quarter earnings report. Management blamed supply chain constraints as it appears to be one of many companies being affected by the chip shortage and shipping delays.
The stock was down 42% as of 10:46 a.m. ET on Thursday.
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So what
Revenue in the quarter fell 2.7% to $95.3 million, well below analyst estimates at $104.4 million. However, demand remained near record levels, and backlog increased from $50 million in the previous quarter to $62 million, showing that orders are increasing.
But supply chain constraints hit the cost side as well with gross margin shrinking from 43.1% to 36.9%, while other operating costs rose, too. On the bottom line, it finished the quarter with an adjusted loss per share of $0.07, compared to breakeven in the quarter a year ago.
The company is taking steps to fix the imbalance with supply and demand, according to CEO Jamie Lerner, who said: "Our business and customer order momentum remains at historically high levels, demonstrated by another quarter of record backlog. However, given the continued pressure on revenues due to supply chain constraints, combined with the increasing supply chain cost environment, we are immediately implementing a series of cost reduction measures, along with pricing increases, across our product categories."
Now what
Looking ahead, guidance for the current quarter was also underwhelming as the company expects revenue of $87 million to $97 million and an adjusted loss per share of $0.05 to $0.09. That compares to analyst estimates at $104.5 million in revenue and a per-share profit of $0.03.
Quantum's revenue has been declining for several years, so while supply chain challenges may be the main reason for the poor results, this isn't the first time the small-cap stock has disappointed. Still, the improving backlog is a good sign. If supply issues ease up, the stock should be in a better place a year from now.
