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Analyst Conference Summary
Dot Hill
HILL
conference date: August 9, 2007 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2007 (2nd quarter 2007)
Overview:
Basic data:
Revenues were $56.2 million, up sequentially from $53.4 million but down from $66.3 million year-earlier.
Net loss was $3.7 million, less than the loss of $6.0 million in Q1 and $6.6 million in Q2 2006.
EPS was negative $0.08, a substantial improvement sequentially from negative $0.13 per share and year-earlier negative $0.15 per share.
Cash and equivalents ended at $88.4 million.
Guidance:
Q3 revenue of $50 to $54 million and an EPS of negative $0.09 to $0.14. Remain cautious about near-term guidance during this transitional period. Expect gross margins to to flat to up slightly.
Expects volatility to continue short term.
Conference Highlights:
Results were better than low end of company's prior guidance.
Gross margin was 12.3%, down slighly sequentially and well down from 20.8% year-earlier.
Cash of $88.4 million was down sequentially from $95.9 million due to operating loss and cyclical working capital requirements.
Largest OEM customer (Sun) accounted for 65% of revenue. Sales to Sun were down sequentially. Non-Sun revenues increased 84% year-over-year.
Backlog was $12.3 million at end of quarter (up sequentially from $7.1 million).
Completed shift to offshore manufacturing with MiTAC and Synnex.
Began production shipments on "a couple of products" to a large OEM customer. Added six new OEMs for 2000 series. Began shipping 2330 iSCSI products.
R&D expenses decreased as new product cycle is nearly complete. Total operating expense was $12 million. Interest income was $1.2 million. Net loss was $3.74 million.
80% sequential increase in series 2000 products.
Q&A:
Getting more visibility on new OEM sales on a weekly basis.
Sun revenue in Q3? Have forecasts going out 6 quarters, but accuracy is traditionally poor.
Inventory buffer effects on financing? Purposefully overbuilt inventories to avoid transitional gaps. Those inventories are lower than the ones from the new offshore production lines.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2007 William P. Meyers