Sterne Agee’s analysis by Alex Kurtz and Amelia Harris, discusses Fusion-IO, Inc. (NYSE:FIO), and how the risk will continue to decline for the software company in wake of strong visibility of its top customers; Facebook Inc (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL). Fusion-IO, Inc. (NYSE:FIO) outperformed on all of Sterne Agee earnings expectations in the FY2012. The earnings call took place on Aug 9th 2012. The stock price went up over 20% on the earnings news.
Q4 earnings were 9 cents per share or $106.6 million, which were far above Sterne Agee’s forecast of 4 cents per share or $96 million. The net income for the corresponding quarter of 2011 was $71.7 million. Sales were up 82%, to $359.3 million. Sales from strategics accounted for 53 percent of the revenue, which was down by two points from the last quarter. The business grew 19 percent on a quarter to quarter basis. A total of 40 customers bought greater than $1 million of goods over the last nine months, and in the reports, the analysts point out that competitors like, EMC Corporation (NYSE:EMC)’s are only receiving small purchases, while FIO is going for the big guns in the PC market.
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53 percent of FIO’s revenues in this quarter came from Facebook Inc (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL). This number is expected to rise even further in 2013. FIO will gain revenue from Facebook Inc (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL) in the coming year, but companies like Cisco Systems, Inc. (NASDAQ:CSCO) and NetApp Inc. (NASDAQ:NTAP) will have minimal contribution in sales, especially in the first six months of 2013. The analysis also expects FIO to benefit from the lag in the release of EMC (NYSE: EMC)’s new version of VFCache.
Fusion’s major standing has been in flash memory technology, where it provided servers and workstations for hosting content of big IT consumers, like Facebook Inc (NASDAQ:FB), Cisco Systems, Inc. (NASDAQ:CSCO) Apple, etc. Sterne Agee expects FIO to grow in the non-Flash industry in the coming year, as well as benefit from the SDK kit, a new product, and the ION software, a component for shared storage platforms. The analysts’ forecast of revenue for FY2013 is $521 million with an EPS of 36 cents, while for FY2014 , Sterne Agee predicts revenue of $656 million with an EPS of 46 cents. This refreshed forecast is up from the previous predictions of $478 million and EPS of 26 cents for FY2013, and $623 million and EPS of 38 cents for FY2014.
The analysis rates the Fusion-IO, Inc. (NASDAQ:FIO) stock as ‘Buy’, while target price is $31 per share. Sterne Agee is a 100 year old firm that provides brokerage services, investment advisory, trust services, asset managements, and various other financial services.