Higher advertising costs hinder Fusion-io's revenue, shares drop

August 8
7:53 AM 2013

Fusion-io Inc, a storage drive manufacturer, posted a large quarterly loss. The company spent more on advertising and suffered from costs associated with the absorption of the workers from a corporation it purchased last April.

Fusion-io stock dropped by 20% during the extended trading following its concluding price at US$14.90 on Wednesday on the New York Stock Exchange. The corporation stated that during the quarter, it hired around 60 workers of Colorado-headquartered NexGen Storage. Right now, the company employs roughly 940 people, up by around 270 employees from last year.

Fusion-io's marketing costs increased by 51%. This resulted in a negative operating margin of 22.4% for the last quarter. Apple Inc and Facebook Inc were among the major customers of Fusion-io. It currently creates solid state memory storage by utilizing the NAND flash technology. Fusion-io has been expanding its revenue base due to a tough competition from bigger rivals.

The company expected that its revenue would increase by 20% for the fiscal year that would end on June 2014. It projected sales of around US$519 million. Furthermore, Fusion-io forecasted a revenue between US$80 million and US$90 million. It also reported a marginal decline in revenue to US$106.05 million in the fourth quarter.

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