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Procom's Prospects Dim

The NAS startup's financials bode a cloudy future

Procom Technology, which reported earnings today, is learning that competing in the network attached storage (NAS) market can be downright nasty.

The company's disappointing financials mirror its difficult transition from a focus on disk drive and tape backup products to NAS appliances. Analysts say the company competes well on price with some products but has had little success penetrating key accounts.

For the fiscal fourth quarter ending July 31, Procom lost $9.4 million, or 64 cents per share, on $8.9 million revenues. That compares with a $1.2 million loss, or 11 cents a share, on $14 million revenues for the quarter a year ago.

Sales were up slightly on a sequential quarterly basis, but the overall trend is down. For the year just ended, Procom lost $19 million, or $1.54 a share, on $42 million revenues. During the prior year, Procom lost $8 million, or 70 cents a share, on $63 million revenues.

The future looks cloudy. When pressed by analysts, company officials on a conference call today said they expect Procom to be profitable during its third quarter, ending April 2002. Yet, they cite market uncertainty as their reason to decline revenue guidance for the current quarter, which will close in a month.

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