Dot Hill (HILL) Shifts Focus of Software Development Efforts; Lowers Q411 Outlook
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EPS Growth %: -175.0%Financial Fact:
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Dot Hill Systems Corp. (Nasdaq: HILL), has stated that it is realigning its software development efforts and updated its fourth quarter 2011 guidance.
Re-alignment of Software Development FocusAfter a careful evaluation of alternatives, Dot Hill has decided to re-align its software investments to focus on accelerating the development of embedded software features, in order to launch a very competitive set of midrange storage array products in 2012, and to provide more differentiated entry-level products for both OEM and channel customers. Dot Hill believes that this will better position the Company to win new customers that may be seeking new or alternative suppliers as a consequence of the consolidations that have occurred in the data storage industry.
As a result, the Company will close the Israel Technology Development Center that was established after the acquisition of Cloverleaf Communications in January 2010, while retaining sufficient technical support personnel to fulfill existing customer obligations. The Company estimates that it will incur charges of around $5.5 million of which approximately 40% will be non-cash charges and that unless a suitable acquirer has been identified, most of the employees will no longer be employed by the Company after March 31, 2012.
Preliminary Financial ResultsDot Hill also updated its fourth quarter 2011 guidance and expects non-GAAP revenues to be approximately $48 million and non-GAAP loss per share to be between $0.02 and $0.03. This compares to the original guidance established in November of non-GAAP revenue of $47 million to $53 million and non-GAAP EPS of a negative $0.03 to a positive $0.03. Cash is projected to be approximately $46.2 million as of December 31, 2011 compared to $45.7 million as of September 30, 2011.
The Street is looking for Q411 loss of 1 cent per share.
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Re-alignment of Software Development FocusAfter a careful evaluation of alternatives, Dot Hill has decided to re-align its software investments to focus on accelerating the development of embedded software features, in order to launch a very competitive set of midrange storage array products in 2012, and to provide more differentiated entry-level products for both OEM and channel customers. Dot Hill believes that this will better position the Company to win new customers that may be seeking new or alternative suppliers as a consequence of the consolidations that have occurred in the data storage industry.
As a result, the Company will close the Israel Technology Development Center that was established after the acquisition of Cloverleaf Communications in January 2010, while retaining sufficient technical support personnel to fulfill existing customer obligations. The Company estimates that it will incur charges of around $5.5 million of which approximately 40% will be non-cash charges and that unless a suitable acquirer has been identified, most of the employees will no longer be employed by the Company after March 31, 2012.
Preliminary Financial ResultsDot Hill also updated its fourth quarter 2011 guidance and expects non-GAAP revenues to be approximately $48 million and non-GAAP loss per share to be between $0.02 and $0.03. This compares to the original guidance established in November of non-GAAP revenue of $47 million to $53 million and non-GAAP EPS of a negative $0.03 to a positive $0.03. Cash is projected to be approximately $46.2 million as of December 31, 2011 compared to $45.7 million as of September 30, 2011.
The Street is looking for Q411 loss of 1 cent per share.
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