NEW YORK (AP) -- Quantum's stock plunged 26 percent Tuesday after the data management company's preliminary first-quarter results came in below Wall Street expectations.
THE SPARK: Late Monday Quantum said that it expects an adjusted loss of between 3 and 4 cents per share for the fiscal period ended June 30. Revenue is anticipated at approximately $141 million.
Analysts surveyed by FactSet expect breakeven results per share on revenue of $155 million.
The San Jose, Calif. company previously predicted revenue of about $155 million.
Quantum said that its performance was due to softer-than-expected European revenue and difficulty closing large deals across all regions during the final weeks of the quarter.
The company will report its first-quarter results on July 31.
THE ANALYSIS: Shebly Seyrafi of FBN Securities lowered Quantum to "Sector Perform" from "Outperform" and cut its price target to $2.30 from $3 on the preliminary results. The analyst said in client note that Quantum may have blamed weakness and Europe and its inability to close big deals before the quarter's end, but Seyrafi believes that increased competition from EMC Corp. is also playing a role in Quantum's difficulties.
The analyst feels that it may be increasingly likely that Quatum will be acquired by NetApp Inc., saying the company may become more agreeable to a buyout considering all of the challenges it faces.
Wunderlich Securities' Brian Freed trimmed Quantum's price target to $2.50 from $3, saying that soft economic conditions likely hurt its tape, disk and software sales.
But Freed maintained a "Buy" rating, saying that the company is still an appealing stock long term thanks in part to the competitive advantage it has by supplying both physical and virtual data recovery services.
SHARE ACTION: Shares of Quantum Corp. declined 58 cents to $1.52 in afternoon trading. The stock slipped to $1.48 earlier in the session, which is the lowest the stock has been since August 2010. For the year to date, the shares are down 15 percent.