Hutchinson Technology, which escaped ruin a year ago by cutting 45 percent of its workforce and slashing costs, beat Wall Street expectations Monday with adjusted fourth-quarter income just below break-even.
Based on one-time gains of $9.4 million from repurchasing debt and selling a plant in Sioux Falls, S.D., the maker of computer disk drive components earned $8.3 million on revenue of $103.2 million. Adjusted income was a loss of 4 cents a share compared with a Wall Street expectation of an 8-cent loss.
A year ago, the Hutchinson-based company was reeling from a downturn in the global economy, and in April it suffered another blow when a major customer, California disk drive maker Seagate Technology, said it would take its business elsewhere.
"It was a positive quarter," said Christian Schwab, an analyst at Craig-Hallum in Minneapolis. "They looked horrible a year ago, but they've taken the very difficult steps of significantly reducing headcount and cutting their way to near break-even. We see the possibility of a return to sustainable profitability in calendar year 2011. And that looked nearly impossible a year ago."
Hutchinson said it expects "at minimum" to keep pace with industry growth, so that it would experience product volume growth in fiscal 2010.
"We are prepared for the resumption in year-over-year demand growth that we expect, and we are better positioned to weather market and economic instability should it occur," said Wayne Fortun, Hutchinson's CEO.
If Hutchinson can ride an upturn in the disk drive market, "the headwind of the Seagate loss will be behind them," Schwab said.
Hutchinson also said Monday it will spend $10 million to $15 million to build a manufacturing plant in Thailand. Until its recent economic crisis, the company had long opposed a shift of manufacturing from Minnesota to Asia.