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Fusion-io shares slide on 3Q results

SALT LAKE CITY (AP) -- Shares of Fusion-io Inc. slid Friday after the company said that higher costs, including expenses related to paying employees in stock, pushed it into the red in its fiscal third quarter.

The costs ate into Fusion-io's gross margin, or the percentage of each dollar in revenue a company keeps as profit after the costs of making its products.

The maker of fast, chip-based computer server memory drives late on Thursday posted a loss of $4.7 million, or 5 cents per share, in the three months ended March 31. That company posted net income of $7 million, or 9 cents per share, in the same period last year.

However, excluding the stock compensation costs and other one-time items, Fusion-io said it earned 6 cents a share for the quarter. That was enough to trump analysts' average forecast of 2 cents per share, according to FactSet.

Fusion-io's revenue jumped 40 percent to $94.2 million in the latest quarter from $67.3 million a year earlier, and well ahead of the $85.4 million Wall Street anticipated.

The Salt Lake City company's costs increased across the board.

Operating expenses — which include sales, marketing, research and development costs — vaulted 93 percent from the prior-year quarter to about $54 million. How much the company spent on making its products rose 37 percent to $49 million.

And its gross margin in the quarter slipped to 52.1 percent from 53.2 percent a year earlier. The company expects that metric to be 54 to 56 percent for the year, below its long-term target of 56 to 58 percent.

Stifel analyst Aaron Rakers said he was skeptical that the company could reach and maintain that level of profitability.

Fusion-io, which went public in June, makes flash memory products that allow companies to store lots of data and access it quickly. Resellers include Dell Inc., Hewlett-Packard Co. and IBM Corp.

Shares of Fusion-io ended regular trading Friday down $1.43, or nearly 5 percent, at $27.55. The company went public at $19 per share, and peaked at $41.74 in November.