Shares of enterprise server technology vendor Fusion-IO (FIO) are down $3.24, or 16%, at $16.85 in late trading after the company this afternoon reported fiscal Q2 revenue and earnings per share that topped analysts’ estimates, but projected this quarter’s, and the full year’s, revenue well below consensus.
Revenue in the three months ended in December rose 43%, year over year, to $120.6 million, yielding EPS of 13 cents.
Analysts had been modeling $120.3 million and 8 cents a share.
For the current quarter, the company sees revenue of $80 million versus the Street’s $137 million estimate.
For the full quarter, the company now projects revenue of $420 million to $440 million, growth of as much as 23%, year over year, which is down from a prior projection offered in October for revenue growth of 45% to 50%, and well below the $530 million the Street has been expecting.
CFO Dennis Wolf attributed the change in this year’s outlook to a deferral of purchases by large customers, stating,
Our two largest customers have purchased nearly half a billion from Fusion-io since 2010, representing robust adoption of our technology. There is a lot of potential with these key customers, and the change in our guidance reflects a two-quarter shift in the timing of their bulk purchases. A healthy pipeline for growth, fueled by new products and partnerships, as well as a solid financial position, with more than�$365 million�in cash and equivalents, will enable us to drive the business forward and create value for our shareholders.
Fusion competes with a variety of other technologies and vendors in the effort to improve server performance in data centers, including technologies from Intel (INTC). Although some of Mellanox Technologies‘s (MLNX) products could function as an alternate solution in some senses, Mellanox is a partner of Fusion’s.
Update: The two customers, of course, are Facebook (FB) and Apple (AAPL), though Fusion is carefully not to bandy their names about. In a conversation following the report, Fusion’s CEO David Flynn pointed out that where once those companies made up over 70% of revenue, when Fusion went public 7 quarters ago, they now are just over 50%, showing the company has already diversified away from its reliance on the two. He said the fact that both did not produce orders for Fusion in the expected time frame shows, in fact, that Fusion products have already produced more efficient data center operations for the companies, thus slowing their need for new technology purchases. At any rate, the smart money already understands all that, he said. “Our large shareholders understand our business.”
Fusion stock is off $3.36, or 17%, at $16.75 in late trading.
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