News

posted on 14 March 2008 09:39

Contrary to the rosy impression of this feature Dot Hill is not riding profitably into the future. It has just reported a thumping great loss of $60.2 million for its full year 2007 results.

Its largest OEM, Sun Microsystems, dropped its order rate and Dot Hill took a huge impairment charge on its SANnet unit, amounting to $40.7 million. Ouch.

The results also included compensation for a previous CEO.

Dot Hill reported 4Q07 revenues of $51.8 million versus $59,4 million in the year-ago quarter. The HP OEM contract performed well and NetApp order rates increased - they contributed a quarter of Dot Hill's revenues in the quarter - but not enough to offset declining revenues from Sun. The net loss for the quarter was $46.4 million compared to $9.1 million a year ago.

The increased loss was sudden and largely due to the SANnet goodwill revaluation. That must have really hurt Dot Hill's CFO.

The full year results were also gory. Full year revenues were $207.1 million versus full year 2006 revenues of $239.2 million. The net loss situation was better; $60.2 million versus $80.8 million. Taking out the impairment charge the 2007 net loss was just $19.2 million so the underlying situation looks much better than a year ago.

Dot Hill's gross margin increased which is a good sign.  It's the first full year under CEO Dana Kammersgard and he's taking time to get the good ship Dot Hill turned around.

According to the earnings call transcript, Dot Hill CFO Hanif Jamal, said: "For the first quarter of 2008, the company is targeting net revenue in the range of $48 million to $52 million, and a net loss in the range of $0.15 to $0.19 per fully diluted share."

If Dot Hill can motor successfully though the rest of this year we can expect to see a profit. Then the 'dynamic' tag could be more reasonably applied. For now it's unjustified.

Read the full results here.

[Phil Robson, news editor.]