UPDATE 2-Xyratex raises Q1 outlook; shares hit year-high
* Ups EPS view to $0.77-$0.87 from $0.24-$0.52
* Sees Q1 rev $313 mln-$318 mln
* Shares jump 20 pct (Adds analysts' comments, updates share activity)
By Mansi Dutta
BANGALORE, March 8 (Reuters) - Data storage technology provider Xyratex Ltd (XRTX.O) raised its first-quarter outlook, helped by improved demand from all key customers, sending its shares up 20 percent to a new 52-week high. For the quarter ending Feb. 28, the company expects earnings of 77 cents to 87 cents per share. It had earlier forecast earnings of 24 cents to 52 cents per share.
Xyratex expects revenue to be up 70 percent to 73 percent at $313 million to $318 million, above its prior outlook of $245 million to $285 million.
Analysts were looking for revenue of $270.6 million. The upside in revenue is primarily due to the NSS business and reflects the shipment of fourth-quarter backlog as well as incremental demand during the quarter, Chief Executive Steve Barber said in a statement.
The fundamentals within the markets that Xyratex serves will continue to improve in the second quarter, he added.
The network storage solutions (NSS) business accounted for about 80 percent of the company's revenue in the last reported quarter. "Our sense is business is strong across the board -- both NSS and systems infrastructure," Needham & Co analyst Glenn Hanus said.
It might not have outperformed in systems infrastructure this quarter but that business should come out strong this fiscal year given the equipment ordering going on, Hanus added.
Stifel Nicolaus analyst Aaron Rakers said the company remains well positioned at Dell's DELL.O EqualLogic, IBM's (IBM.N) XIV, EMC's (EMC.N) Data Domain, Compellent Technologies CML.N, and others.
Rakers, who has a "buy" rating on the stock, said Xyratex could benefit from expansion beyond XIV within IBM later this year or into 2011.
Shares of the company, which touched $18.47 in morning trade Monday on Nasdaq, were trading up 17 percent at $17.91. (Reporting by Mansi Dutta; Editing by Ratul Ray Chaudhuri, Unnikrishnan Nair)
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