Financial

posted on 19 August 2008 07:54

Data protection vendor Tandberg Data reported rising revenues but a much worse net loss for its Q2 08 quarter as it resturctures and gets its costs down whilst removable disk revenues start to grow.

Revenues for its second '08 quarter were $50.1 million, up 10.1 percent on Q2 07's $45.25 million but sequentially virtually flat. Loss before tax was $13.1 million, compared to a loss before tax of $7.4 million in Q2 07 and $2.2 million in Q1 08.

Gross margin (GM) in Q2 08 was 27.1 percent, a 2.7 point improvement from Q1 07. Operating expenses (OPEX) in Q2 08 were $12.2 million, down from Q1 08's $14.5 million and down also from Q2 07's $13.7 million. That's due to restructuring taking place.

For the first half of the 2008 revenues were $100.8 million, up $5.6 percent on the $95.4 million recorded in H1 07 but product sales revenues were flat. Net loss was $15.3 million, a worsening of nearly 150 percent on H1 07's $6.3 million. Ouch.

GM went down, from 29.4 percent in H1 07 to 25.7 percent in H1 08 due to an unfavourable product mix. Thankfully OPEX went down too, from H1 07's $27.3 million to H1 08's $26.7 million.

On the product side the revenue pattern changed.

The main product group is tape drives, which made up 46.4 percent of the revenue in H1 08 compared to 41.8 percent in H1 07.
- Tape automation revenues made up 15.4 percent in H1 08 compared to 23.4 percent in H1 07.
- Media revenues made up 20.3 percent in the H1 08 compared to 25.5 percent in H1 07.

The fastest growing product group is the Disk Based group where the RDX Quikstor removable disk products made up 16.7 percent of total revenues in the first half of 2008 compared to 8.0 percent in the same period in 2007.

Total revenues from RDX in Q2 08 are up about 93 percent since Q2 last year and on a year-to-date basis up more than 100 percent.

With Tandberg having world-wide manufacturing rights for Quikstor and HP having licensed the technology there should be a big ramp in RDX-based revenues in 2009.

A management challenge is to get cost out of the tape-based product operations and revenues up from the disk-based products. There's still a lot of money to be made from tape and new tape products will help there. We can look forward, hopefully, to a better second half of 2008. The company said: "The cost reduction program introduced by the new management will see an annualized cost reduction of $16.0 million. Most all of the reduction initiatives were completed in Q1 and Q2 2008 and we started seeing the impact on cost in Q2. Further benefits of the cost reduction program will be seen gradually throughout the financial year 2008."

The company is hopeful that 2009 will be a significantly better year than this turnaround 2008.

^{[Chris Mellor.]}