conference date: May 5, 2009 @ 2:00 PM Pacific Time
for quarter ending: April 4, 2009 (1st quarter)
Overview: Some pick up in revenues over disastrous Q4 2008, but still well down from year-earlier and operating way in the red.
Basic data (GAAP) :
Revenues were $44.4 million, up 14% sequentially from $38.8 million, but down 44% from $67.8 million year-earlier.
Net income was negative $13.4 million, improved sequentially from negative $19.5 million, but way down from a loss of $0.8 million year-earlier.
EPS (earnings per share) were negative $0.45, improved sequentially from negative $0.66, but down from negative $0.03 year-earlier.
None, because of difficulty and complexity of Silicon Graphics acquisition.
Despite the operating losses, cash and equivalents rose $0.6 million in the quarter to end at $181.2 million. Both accounts receivable and accounts payable decreased dramatically.
Has seen an increase in RFPs (requests for proposals), but is not certain this will result in increased revenues. The sequential increase in revenues was due to larger orders from two key customers.
Certain inventories were reduced through aggressive pricing, and there was "increased competitive pressure from various server vendors offering aggressive deals during the quarter." Also, margins were reduced because of a higher mix of sales for the Internet data center segment. They are not satisfied with resulting margins (6% non-GAAP).
The acquisition of Silicon Graphics for $42.5 million has received court approval and should close around May 8th. FAS 141R will apply. Expects to stabilize non-GAAP gross margins in the 20's after Silicon Graphics is integrated. Will have a presense in over 25 countries with a 5000 customer installed base after the acquisition. Not assuming Silicon Graphic's major debts. Will quickly reduce personel by about 10% and reduce cash compensation until the company becomes profitable.
Two ICE Cube containerized data centers were delivered. Evaluation units of CloudRack C2 were delivered. The new Intel Xeon 5500 processor series, Nehalem, is now available.
Channel revenue was up 89% sequentially and up 49% from year-earlier.
Over 25 new customers were acquired in verticals including telecommunications, defense, scientific research, digital media, and Internet. New customers included MyYearBook.com, the third largest social networking site in the U.S. 10% customers in the quarter were Amazon and Microsoft. Internet segment represented 72% of revenue; financial vertical 13%. International revenue was 18% of total. Storage revenue was 25% of total. Service business grew.
The stock repurchase program was suspended so the cash could be used to acquire Silicon Graphics.
Non-GAAP net loss was $7.2 million.
Cost of revenue was $41.7 million, leaving gross profit of $2.7 million. Operating expenses of $16.4 million included $3.1 million for research and development, $4.2 million for sales and marketing, and $9.0 for general and administrative. Other income was $0.1 million
$3.5 million of general and administrative expense was acquisition-related. $1.6 million of expenses were for non-cash, stock-based compensation.
Headcount reduced by 42, to 276.
None were asked!
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