Dot Hill: Preliminary 1Q09 Financial Results

Dot Hill Systems Corp. announced preliminary financial results for the first quarter of 2009.

For the first quarter of 2009, the company expects net revenue in the range of $53.5 to $54.0 million. This is below the net revenue guidance for the first quarter of 2009 issued on February 26, 2009 of $56 to $63 million. The company attributed the expected net revenue shortfall to the global economic environment.

In addition, the company has improved and narrowed its targeted first quarter 2009 net loss per fully diluted share to between $0.05 to $0.07 on a non-GAAP basis, which excludes estimated share-based compensation expense of approximately $0.7 million, estimated foreign currency losses of approximately $0.1 million and estimated severance and restructuring expenses of approximately $0.1 million. This compares to the guidance the company issued on February 26, 2009 for non-GAAP net loss per fully diluted share between $0.06 to $0.11.

The preliminary net loss per fully diluted share results are primarily due to better than expected gross margin performance as well as tight expense controls. The company had indicated on February 26, 2009 that it expected non-GAAP gross margin percentage for the first quarter of 2009 to be flat to slightly down from the 14 percent achieved in the fourth quarter of 2008, and that non-GAAP operating expenses were expected to be slightly lower than the $12.5 million achieved in the fourth quarter of 2008. The company now expects non-GAAP gross margin percentage to increase and still expects non-GAAP operating expenses to decline in the first quarter of 2009 compared to the fourth quarter of 2008. These non-GAAP financial measures exclude the impact of share based compensation expenses, foreign currency losses and severance and restructuring expenses.

"We said in the last earnings call that our revenue for the first quarter was very hard to predict, and that was the case," said Dana Kammersgard, president and chief executive officer, Dot Hill. "However, we believe we had a solid quarter despite the economy’s effect on our preliminary revenue. We have managed operating expenses and product cost reductions very well. Gross margins also benefited from a more favorable mix of customer and product sales. We have continued to focus on lowering our break-even point and in that regard we believe we have made good progress during the first quarter of 2009."

"We are also particularly pleased with the company’s management of its cash and working capital," said Hanif Jamal, senior vice president and chief financial officer, Dot Hill. "As indicated in our last earnings call, we expected cash and cash equivalents to be in the high $40 million to low $50 million range. We are now projecting cash and cash equivalents will likely be in the range of $54.0 to $54.5 million as of March 31, 2009, as compared to $56.9 million as of December 31, 2008."