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StorageTek Sings Sad Song

Although Storage Technology Corp. (StorageTek)'s (NYSE: STK) latest earnings warning was mild compared to some other storage companies, things might get worse for the tape library vendor before they get better (see StorageTek Sales Suffer).

StorageTek joined the chorus of disappointing pre-announcements last week when CEO Pat Martin said the company would have revenues from $510 million to $520 million and earnings per share between $0.29 and $0.33 for the quarter that just ended. First Call consensus for StorageTek had been $549 million and $0.32.

Previous earnings warnings came from Emulex Corp. (NYSE: ELX), Veritas Software Corp. (Nasdaq: VRTS), Overland Storage Inc. (Nasdaq: OVRL), Maxtor Corp. (NYSE: MXO), and BakBone Software Inc. (Toronto: BKB). (See Emulex Hits the Deck, Veritas Takes a Dive, Overland Guides Under, Maxtor Cuts Heads, Guidance, and Another Reason to Hate Compliance.)

Similar to other companies in the industry, we found this to be a challenging period," Martin said. "This is not the quarter that we had expected to deliver. We experienced an unexpected but definite decline in order flow during the last two weeks of the quarter.”

Despite Martin’s statement, StorageTek’s problems apparently began before the end of June and will probably last at least another quarter. Even before the company revised its earnings forecast, analysts were reporting that the quarter was soft for StorageTek and other tape vendors, as disk backup starts to pick up steam.

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