Storage VAR MTI Grows Sales, But Margins Shrink

Storage VAR MTI Technology on Friday said the company's revenue grew and its losses shrank in the first quarter of fiscal 2007, but late bookings took a bite out of its services revenue and earnings.

Irvine, Calif.-based MTI, one of the country's few publicly listed solution providers, saw earnings for the quarter, which ended July 1, hit $42.6 million, up 8.4 percent compared to the $39.3 million it reported during the same quarter of last year.

The company also reported a loss of $869,000, or 7 cents per share, for the quarter, down from a loss of $3 million, or 10 cents per share, the year before.

MTI's biggest vendor partner is Hopkinton, Mass.-based storage heavyweight EMC. EMC also has an equity stake in MTI.

On the revenue front, product revenue grew during the year by 13.6 percent to reach $33.2 million, while service revenue fell 6.4 percent to $9.5 million. Company executives attributed the fall in service revenue to late bookings, and said it expects service revenue to rebound in the next quarter.

MTI's margins suffered during the last year. Gross margin for the quarter was 18.6 percent, down from 20.5 percent last year. During that time, product gross margin fell to 18.5 percent from 19.6 percent, while service gross margin fell to 19.2 percent from 23.3 percent.

MTI, which is on CRN's Fast-Growth list of 100 fastest growing solution providers for a reported 79 percent growth over a two-year period, in July acquired another solution provider, Collective Technologies, in order to expand its solutions and services portfolio.

Tom Raimondi, president and CEO of MTI, said in a statement, "We believe the work we have done to improve MTI's existing business, combined with the acquisition of Collective Technologies, has provided the opportunity to increase shareholder value, and we are focused on continuing to execute our growth strategy and improve operational excellence."

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