3Par Issues Rev Warning; Trouble In Storage Sector

Storage systems provider 3Par (PAR) this afternoon warned that results for its fiscal first quarter ended June 30 will be short of previous guidance.

The company now sees revenue of $44.2 million to $44.5 million, down 8%-9% sequentially, and below pervious guidance of $48 million to $50 million. The company blamed the shortfall on “installation delays at customer sites which prevented the recognition of significant revenue from shipments out of the company’s backlog, as well as a weaker demand environment experienced during the quarter.”

The company expects to post a non-GAAP loss in the quarter of zero to one cents a share. The Street had expected a profit of a penny a share.

CEO David Scott said in a statement that that the company “obviously expected to perform better in the first quarter and are disappointed with the sequential decrease.”

He also made this disturbing comment - disturbing to anyone betting on a near-term pick-up in IT spending: “During the June quarter, we saw spending restrictions across many segments of our business as a result of the economic downturn, reflected as a sluggishness to place new orders. This phenomena increased in intensity towards the end of our first quarter, similar to the turbulence we experienced at the end of our fiscal 2009 third quarter, as there was a renewed reluctance amongst prospective and existing customers to commit to major capital expenditure.”

Scott says the company now sees revenue for the March 2010 fiscal year of $190 millionto $205 million, with non-GAAP profits of zero to 10 cents a share. The Street consensus had been $201.3 million in revenue and profits of 16 cents a share.

For the September quarter, the company sees revenue of $43 million to $47 million; the Street had been at $50.7 million.

The company also said that while it is reaffirming its long-term operating margin target of 15%-19%, it no longer believes it can hit the low end of the range by FY 2011. To hit that level, the company said , will require a run rate of $100 million a quarter. Right now, that looks a long way off.

In late trading, PAR is down $1.03, to $10.42.

Combined with today’s warning from Sun Microsystems, you have to wonder where the recovery is in IT spending generally - in in storage in particular.