Procom Shares Skyrocket After Positive Analysis

Shares of Procom Technology Inc., a Santa Ana computer data storage company, jumped nearly 35% on Wednesday after a well-known technology periodical issued an upbeat analysis of the company.

Procom’s stock closed at $57, up $14.75 a share, after reaching a high for the day of $74 in extremely heavy Nasdaq trading. A total of 8.7 million shares changed hands, more than 90 times the stock’s average daily volume of 98,100 over the past three months.

Despite the big run-up, however, the stock still didn’t hit its 52-week high of $89.75 a share, reached March 10 before the huge sell-off in technology stocks began.

The Gilder Technology Report, released Wednesday morning, highlights the flexibility of Procom’s network storage products, compared with those of a much-larger competitor, Network Appliance Inc. in Sunnyvale.

“Procom can expand unit sales more rapidly. With a faster accumulation of units, Procom’s costs will drop faster and its performance will become increasingly competitive,” the report notes.

The report, started by George Gilder in 1995, has previously been a catalyst for sharp moves in other technology stocks. One industry insider likened a positive write-up in the publication to “being kissed on the lips by God.”

Gilder could not be reached for comment.

Procom, which makes file servers known as network attached storage systems, also said Wednesday that it is launching a software upgrade for some of its mid- and high-end storage devices. The upgrade is aimed at increasing performance at no additional cost.

Page Tagizad, director of product management at Procom, declined to comment on the Gilder report.

He said, however, that the company’s NetForce 1500 storage product, which was introduced in late April, and the software upgrade are being well-received by customers.

“We believe the network attached storage market is growing,” he said. “It’s a young market.”

The market for mid-range and high-end network attached storage products was $1.1 billion last year, Tagizad said, and is expected to grow 92% a year to reach $4.3 billion by 2003.

Procom has lost more than $11 million over the past six quarters. Sales fell 39% over that period. For its fiscal third quarter, ended April 30, it lost $2.5 million, or 22 cents a share, on sales of $13.8 million.

By contrast, Network Appliance is more than five times larger, with revenue last year of $579.3 million.

Procom, founded in 1987, has 275 employees worldwide.