Silicon Graphics shares plunged to an intra-day low of $10.57 today, and at last check, the stock was down 23.24% to $11.03 on above average volume of 5.10 million.�
Silicon Graphics shares are taking a hit after the company reported weak results for the second quarter and also lowered its full-year earnings forecast. SGI also said that it plans to restructure its European business as it looks to lower its relatively high costs in the region. The company raised its full-year revenue guidance, however, said that lower margins would squeeze profits.�
For the full year, the company expects adjusted profit to come in between $0.15 per share and $0.30 per share. Revenue for the full fiscal year is expected to come in between $770 million and $800 million. This compares with the company�s earlier forecast of adjusted earnings of $0.60-$0.80 per share and revenue of $740-$780 million.�
For the second quarter ended December 31, 2011, Silicon Graphics reported revenue of $195.2 million, representing an increase of 10% over the same period in the previous year. Despite the sharp increase, SGI�s second-quarter revenue fell short of Street estimates of $197.1 million. Non-GAAP profits for the quarter were $0.04 per share, well below Street estimates of $0.25 per share.
Ron Verdoorn, CEO of Silicon Graphics, said that the company faced some challenges in the quarter that hurt margins. Verdoorn said that SGI�s overall gross margin was hurt by challenging economic conditions in Europe and the high cost of doing business there. He said that the company is taking a decisive action to align its business for sustainable profit growth and is planning to restructure its European operation.�
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