conference date: February 12, 2009 @ 2:00 PM Pacific Time
for quarter ending: January 3, 2009 (4th quarter)
Overview: Yet another disaster quarter, with revenues way down. ICE Cube orders were delayed.
Basic data (GAAP) :
Revenues were $38.8 million, down 41% sequentially from $65.3 million and 65% from $111.3 million year-earlier.
Net income was negative $19.5 million, down sequentially from negative $6.0 million but slightly up from negative $19.0 million year-earlier.
EPS (earnings per share) were negative $0.66, down sequentially from negative $0.20 and down from negative $0.65 year earlier. From continuing operations EPS was negative $0.61.
First quarter 2009 revenue flat to slightly up from Q4. Operating expenses for 2009 down 10% from 2008. Expect losses to exceed 2008 levels because of investment in business.
Emphasized decision to buy back $40 million of company stock, which should leave about $140 million in cash. The market capitalization at $4 per share would be only $120 million. 9% of cash was burned in 2008 to fund operations. Plans to invest up to 10% of cash into business in 2009 for R&D and expanded sales.
2008 was a very challenging year. Capital expenditures by customers may contract in 2009, with the possible range being wide.
Plunging revenues were due to pause in orders from two top customers, who together bought $114 million less in 2008 than 2007. Otherwise added customers in quarter and sales increased full 2007 to full 2008 by 5%. 100 new customers added in 2008.
Non-GAAP net loss: $5.1 million or negative $0.17 per share.
Three 10% customers, Conoco Philips, Amazon and Microsoft.
Cash ended at $180.6 million, down $4 million in the quarter. Accounts receivable decreased by $17 million and accounts payable by $24 million.
Operating expenses decreased 42% from year-earlier and 18% from Q3. Work force further reduced by 15% in January. Was 318 end of December.
GAAP Gross margin was negative 15.5%, but non-GAAP positive 15.1%.
MicroSlice architecture is the latest offering. Basically, it does virtualization with hardware instead of software. Based on low-power AMD processors.
Focusing on oil and gas, and on financial verticals. Storage revenue in 2008 was up 23% over full 2007.
Cost of revenue was $44.8 million, so there was a gross loss of $6.0 million. Operating expenses were $13.3 million, including $3.2 million for R&D, $5.1 million for sales and marketing, and $5.0 million for general and administrative. Loss from operations was $19.4 million. Other income was negative $0.4 million.Tax benefit from continuing operations was $1.6 million. Loss from discontinued operations was $0.5 million. Income taxes for discontinued operations were $0.9 million.
$15.7 million net cash was used in operating activities.
Container business? Big ticket purchases are being delayed. No revenue recognition from ICE Cube in 2008. We are 100% committed to going forward with this solution. Interest remains high. There have not been cancellations, just delays.
Largest accounts all market driven? We don't see it as a shift in our market share; it was the concentration in the two large customers who reduced their spend.
R&D at $3.4 million for quarter? We think that may be just for the quarter.
Guidance for Q1, confidence in? We had a strong backlog going into January.
NetApp relationship? Storage was about 15% of business in 2008. We are about to bring a new bulk storage solution to market. NetApp partnership is going well; we will see revenues in 2009.
No gross margin guidance for 2009, but the greater the storage contribution in the mix, the higher the gross margin.
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