WASHINGTON (AP) -- Shares of Violin Memory lost nearly half their value Friday after the data storage company's worse-than-expected third-quarter results and outlook prompted a downgrade from a Wall Street analyst.
THE SPARK: Violin Memory reported a loss of 63 cents per share, excluding one-time items, on revenue of $28.3 million for the period ended Oct. 31. That was significantly worse than the forecast of analysts polled by FactSet, who had expected a loss per share of 45 cents on revenue of $31.7 million. The company forecast sales between $30 million and $32 million for the fourth fiscal quarter. Analysts polled by FactSet were expecting $43.3 million.
THE BACKGROUND: The Santa Clara, Calif.-based company went public in late September. It makes flash storage systems which are designed to be faster and easier to use than conventional hard drives.
THE ANALYSIS: Pacific Crest Securities analyst Brent Bracelin downgraded the company shares to "sector perform." The 16-day partial government shutdown last month hurt Violin Memory's sales, Bracelin said. But an "even bigger yellow flag" was the decline in sales that he estimated from non-government customers, he said.
"This adds to our concerns about Violin Memory's ability to sustain hypergrowth next year, particularly in the face of increasing competitive alternatives in the all-flash array space," Bracelin wrote in a research note.
SHARE ACTION: Shares of Violin Memory Inc. fell $2.79, or 47 percent, to $3.21 in afternoon trading Friday. Shares have lost nearly two-thirds of their value from their initial public offering price of $9.