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Adaptec Agonistes

Lowers guidance for fourth straight quarter while dealing with internal transition

Adaptec Inc. (Nasdaq: ADPT) says its slump has extended for the fourth straight quarter, in the wake of management disarray and sales struggles.

Adaptec issued preliminary earnings for this quarter Tuesday night, putting revenue at $103 million to $106 million -- below its previous guidance of $114 million to $117 million. The warning marks the fourth straight quarter that Adaptec has adjusted guidance downward, and its new revenue forecast marks a decrease both sequentially and year-over-year (see Adaptec Unveils OEM, Revs Guidance, Adaptec Lowers Guidance , and Storage Suppliers Mix Messages). Adaptec reported revenue of $111.2 million last quarter and $115.5 million in the same quarter last year. The current quarter ends Thursday.

Adaptecs original guidance in April anticipated hard-drive shortages and a slower ramp of OEM sales through IBM Corp. (NYSE: IBM), though the company expected higher components revenues this quarter. Now Adaptec says it was hurt by poor sales to OEM and channel customers this quarter, along with a decline in prices for its components as the market shifts to lower-cost SATA drives.

Adaptec sells storage components as well as SAN and NAS systems. OEM and channel revenues make up more than 90 percent of its business. IBM is Adaptec’s biggest OEM partner, and poor OEM sales suggests the DS300 and DS400 low-end SANs that Adaptec supplies to IBM have not yet taken off.

On the components front, Adaptec could be losing business to LSI Logic Corp. (NYSE: LSI), which earlier this month increased its revenue forecast, citing strong sales of storage components (see LSI Logic Improves Forecast).

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