Boston, MA 10/25/2013 (wallstreetpr) – Fusion-IO, Inc. (NYSE:FIO) managed to beat analysts’ estimates for its 1Q2014 results. The company announced its quarterly results recently. Revenues were $86.3 million for the quarter, a drop of 27% over the same period last year. Analysts had expected revenues to be $84.73 million only. On adjusted basis, the net loss was $0.07 per share against estimate of $0.11 per share by analysts. The GAAP net loss was $27.9 million translating to $0.28 per share. The company issued a weak guidance for the next quarter. The company expects revenue growth to be weak; analysts were expecting good growth with revenues touching $114.26 million in the second quarter. The company also expected non-GAAP gross margin to slip further than 1Q2014 margin of 59.4%. The non-GAAP operating margin is expected to be negative 15% to negative 20%, worse than the first quarter net margin of negative 13.3%.
The company also lost two of its main executives; the chief financial officer is leaving the company for other opportunities, and the chief sales officer is retiring. The company also appointed three new executives – chief strategy officer, VP of research and development and chief information officer. The company will need to fill these positions soon as they are critical in the current scenario.
Fusion-IO is not yet doomed; it is still sitting on cash reserves of $225.3 million. The investors are spooked by the weak guidance and leaving of key personnel. They dumped the company’s shares on October 24, 2013. The shares touched the 52 week low of $9.53 before recovering to close at $9.82, a drop of 24.35% over the previous close. Investors have been watching the moves of Seagate Technologies PLC (NASDAQ:STX) and expect Seagate to take over the company. Western Digital Corp (NASDAQ:WDC) had taken over Fusion-IO’s main competitor Virident in September 2013. The acquisition battle was fierce between Western and Seagate, but in the end, Western could swing the deal in its favor. Investors are now hopeful that Seagate will make its moves on Fusion-IO as the market for enterprise SSD is expected to cross $7 billion by 2017 from $2.5 billion in 2012.
