Xyratex: 4Q and FY Results

Xyratex Ltd. announced results for the fourth
quarter and fiscal year ended November 30, 2007. Revenues for the
fourth quarter were $248.0 million, an increase of 2.9% compared to
revenues of $241.1 million for the same period last year.

For the fourth quarter, GAAP net income was $11.7 million, or $0.39
per diluted share compared to GAAP net income of $9.4 million in the
same period last year. Non-GAAP net income increased 20.5% to $13.1
million, or a diluted earnings per share of $0.44, compared to non-GAAP
net income of $10.9 million, or $0.37 per diluted share,  in the same
quarter a year ago.

Gross profit margin in the fourth quarter was 18.5%, compared to
17.4% in the same period last year and 17.9% in the prior quarter.

Revenues from sales of our Networked Storage Solutions (NSS)
products were $187.2 million in the fourth quarter as compared to
$167.6 million in the same quarter a year ago, an increase of 11.7%.
Gross profit margin in the Networked Storage Solutions business was
15.0% as compared to 13.0% a year ago. Revenues from sales of our
Storage Infrastructure (SI) products were $60.8 million as compared to
$73.5 million in the same quarter a year ago, a decrease of 17.3%.
Gross profit margin in the Storage Infrastructure business was 29.7% as
compared to 27.9% a year ago.

Revenues for fiscal year 2007 were $931.6 million, a decrease of
5.3%, compared to revenues of $983.6 million for fiscal year 2006.
Revenues from sales of our NSS products were $694.0 million for the
year as compared to $598.8 in 2006, an increase of 15.9%. Revenues from
sales of our SI products were $237.6 million as compared to $384.9
million in 2006, a decrease of 38.3%.

GAAP net income for fiscal year 2007 was $28.1 million or $0.94 per
diluted share compared to a GAAP net income of $58.2 million for fiscal
year 2006. Non-GAAP net income for fiscal year 2007 decreased 42.3% to
$37.5 million, or a diluted earnings per share of $1.26, compared to
non-GAAP net income of $64.9 million, or $2.19 per diluted share, for
fiscal year 2006.  

“I am pleased with our performance for the 2007 Fiscal Year given
the challenges we anticipated at the beginning of the year and duly
experienced. And while we weren’t immune from constrained capital
expenditure in the Hard Drive Industry, our competitive differentiation
and business fundamentals in both of our businesses remain strong,”
said Steve Barber, CEO of Xyratex. “The results for the year support
our strong position in the industries we serve and our ongoing effort
and focus in expanding our partnerships with our existing customers and
in developing partnerships with new customers. We are confident that
the fundamentals within the markets we serve are positive and that our
technology and strong execution will benefit us over the longer term.” 

Stock Repurchase Plan
The Board of Directors has
recently authorized a stock repurchase plan. According to the terms of
the plan, the Company may repurchase up to $30 million of its
outstanding common stock following the cessation of the current
black-out period on January 11, 2008. As of November 30, 2007, Xyratex
had 29.9 million shares outstanding.  

Business Highlights
• We announced an OEM agreement with NetApp to develop and supply
general disk arrays for a variety of NetApp products. This agreement
builds on the successful implementation of disk arrays currently
provided by Xyratex to NetApp and incorporated within NetApp’s industry
leading storage hardware platforms.
• We announced our new OneStor Extensible Storage Platform (ESP) and
announced the first in a series of scalable offerings that will be
available for storage and server OEMs. OneStor is a modular,
standards-based architecture designed to meet diverse needs combining
storage density, intelligent platform management, power efficiency and
the industry’s most versatile storage system design.
• We secured new design wins with ONStor Inc., BlueArc Corp., transtec AG, VMETRO Inc. and EDI Technology Inc. in China.

Business Outlook
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. These statements do not include the potential impact of any
future acquisitions or divestitures.
• Revenue in the first quarter of 2008 is projected to be in the range $205 to $225 million. 
• Fully
diluted loss per share is anticipated to be between $(0.17) and $(0.05)
on a GAAP basis in the first quarter. On a non-GAAP basis fully diluted
loss per share is anticipated to be between $(0.09) and earnings of
$0.03. Non-GAAP earnings per share excludes non-cash equity
compensation, amortization of intangible assets, certain other
acquisition related charges and related taxation expense.
• These projections reflect continued capital spending constraints in the Hard Drive Industry.

Xyratex Ltd.