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StorageNetworks Cuts Guidance, 220 Workers

It's been a bad couple of days for Massachusetts data storage companies.

Yesterday, EMC waxed pessimistic about the economy. And today, StorageNetworks cut estimates and said it will lay off 220 because of lagging orders.

The job cuts, which represent 32 percent of the Waltham company's staff. Most of those who will lose their jobs work in the sales, delivery and support departments.

"Given these organizational changes, I feel confident that we will achieve gross margin profitability in the third quarter of this year, one quarter ahead of previous guidance," said Paul Flanagan, StorageNetworks' CFO.

The company also has $350 million in cash and $35 million in available financing, enough to see it through to profitability, Flanagan said.

For the year, the company now expects 2001 revenues to be between $120 million and $127 million.

StorageNetworks also released second-quarter results this morning. For the three months ended June 30, it had a net loss of $32.2 million, or 33 cents per share, compared with a loss of $32.9 million or 34 cents per share for the previous quarter.

"I am pleased with our second quarter results in terms of revenue growth, gross margin improvement, EBITDA loss, and net loss per share," said Peter Bell, StorageNetworks' chairman and CEO. "During the quarter, we continued to execute on our strategy -- to make our software the industry standard for data storage management."

Bell highlighted new customer wins in the quarter including Cisco, Enron, Martha Stewart, American Greeting and Saks Fifth Avenue as signs of the company's strength.

Shares of STOR fell yesterday ahead of the news, and because of a downgrade by analysts at Dain Rauscher Wessels, to 6.38. In the last 52 weeks, the issue has ranged from 6.25 to 154.25.



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