Veritas, Dot Hill Report Positive Financials


Dot Hill better than expected, Veritas strong but barely meets revised expectations


Storage vendors Veritas Software and Dot Hill Systems both reported improved financials compared with a year ago.

Executives at Dot Hill, a Carlsbad, Calif.-based disk array vendor, on Wednesday said earnings for the second quarter, which ended June 30, were $69.9 million, up 44 percent from the $48.4 million reported for the same quarter last year. Guidance for the quarter's revenue had been set at between $57 million and $60 million.

The company earned $6 million, or 13 cents per share, during the second quarter, compared with $2.6 million, or 7 cents per share, for the same quarter last year. That figure includes expenses related to the acquisition of Chaparral Network Storage last February and the discontinuation of its SANnet II NAS project.

James Lambert, Dot Hill's president and CEO, attributed the company's strong revenue and earnings report to better-than-expected sales from its largest OEM customer, which industry sources said is Sun Microsystems. Sun, which last week reported a small growth in year-over-year storage revenue, has a small equity stake in Dot Hill.

For the third quarter, Dot Hill is expecting revenue in the $57 million to $61 million range, with earnings per share of 8 cents to 10 cents, said Preston Romm, CFO. This compares with revenue of $51 million and earnings of 10 cents per share in the third quarter of last year.

Dot Hill unveiled its earnings report before the market opened Wednesday. By late Wednesday, shares were down 3.8 percent to $7.80.

Meanwhile, Veritas executives said Tuesday that the Mountain View, Calif.-based storage management software vendor had revenue of $485 million during its second quarter, which also ended June 30. This figure represented a 19 percent increase compared with the $408 million it reported last year.

Income for the quarter hit $86 million, or 20 cents per share, compared with $46 million, or 11 cents per share, last year.

On July 7, Veritas' stock lost a third of its value when company executives warned that it would not meet its guidance for the quarter. At the time, they said they expected revenue to be between $485 million and $495 million, down from earlier expectations of $490 million to $505 million.

Gary Bloom, chairman, president, and CEO of Veritas, said in a statement that the June quarter "was challenging in our U.S. enterprise business, particularly for license transactions at the end of the quarter."

Guidance for revenue for the next quarter is between $485 million and $505 million, while earnings are expected to hit 19 cents to 21 cents per share.

Veritas reported earnings after the close of the market on Tuesday. By midday Wednesday, its share price had dropped about 3 percent to $18.48.