Smart Modular: FY Q3 Revs Top Guidance; Margins Weak
Smart Modular (SMOD) shares are getting slammed this morning on disappointment over the company’s results for its fiscal third quarter ended May 30.
Revenue in the quarter totaled $167.6 million, ahead of the company’s most recent guidance of $150 million to $155 million. Pro forma profits nonetheless came in at 5 cents a share, at the bottom end of the company’s projected range of 5-7 cents, raising concerns on margins.
The theme was repeated in the third quarter guidance. SMOD sees revenue of $160 million to $170 million, which is above the Street consensus of $158.8 million. But SMOD sees EPS for the quarter of 6-7 cents, while the Street had been looking for 10 cents.
The results prompted estimate cuts from analysts at Oppenheimer, Lehman and JMP Securities. All were disappointed with margins. “While diversification efforts appear to be on track,” writes Oppenheimer’s Dan Morris, margin pressures in the DRAM business remain “a significant” headwind.
SMOD today is down 46 cents, or 9.2%, to $4.57.
Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields.
