Concerns about shrinking profit margins at Silicon Graphics International sparked a sell-off in the company's stock that wiped away a quarter of its value, a day after it posted weak quarterly results and slashed its full-year earnings outlook.
On Tuesday, the company, which provides rack-mounted computer servers designed for large-scale data center deployments, said it plans to restructure its Europe business as it looks to combat relatively high costs in the region.
Silicon Graphics, whose larger rivals include IBM, HP and Oracle, raised its full-year revenue guidance but said lower gross margin expectation would squeeze profitability.
The company forecast an adjusted profit of 15 cents to 30 cents a share for the year on revenue of $770 million to $800 million. It had earlier expected adjusted earnings of 60 cents to 80 cents a share on revenue of $740 million to 780 million.
Silicon Graphics shares were trading down 25 percent at $10.72 on Wednesday morning on the Nasdaq, after touching a low of $10.57 earlier in the session.
(Reporting by Siddharth Cavale in Bangalore; Editing by Viraj Nair)