Xyratex: Fiscal 1Q08 Financial Results

Xyratex Ltd announced results for the first fiscal
quarter ended February 29, 2008. Revenues for the first quarter were
$217.1 million, a decrease of 8.2% compared to revenues of $236.4 million for
the same period last year.

For the first quarter, GAAP net loss was $2.2 million, or $0.07 per
diluted share, compared to GAAP net income of $10.1 million, or $0.34 per
diluted share, in the same period last year. Non-GAAP net income decreased 94%
to $0.7 million, or a diluted earnings per share of $0.03, compared to non-
GAAP net income of $11.9 million, or $0.40 per diluted share, in the same
quarter a year ago.

Gross profit margin in the first quarter was 15.1%, compared to 19.0% in
the same period last year, primarily due to the decrease in Storage
Infrastructure revenues.

Revenues from our Networked Storage Solutions products were $187.8 million
as compared to $163.6 million in the same quarter a year ago, an increase of
14.8%. Gross profit margin in the Networked Storage Solutions business was
14.7% as compared to 13.6% a year ago. Revenues from our Storage
Infrastructure products were $29.3 million as compared to $72.8 million in the
same quarter a year ago, a decrease of 59.8%. Gross profit margin in the
Storage Infrastructure business was 18.9% as compared to 31.6% a year ago.

"I was pleased with our first quarter results which were towards the top
end of our expectations, which reflected the continued capital spending
constraints in the Hard Drive Industry. As anticipated we are now seeing
evidence of an increase in demand for capital equipment from our customers and
I am encouraged with regard to the healthy fundamentals we see within the two
markets we serve," said Steve Barber, CEO of Xyratex. "Though the global
economic conditions remain uncertain, I believe the markets we serve will
remain healthy and that our customers are well positioned within their
respective markets. We will continue to work with our customers to make them
more competitive in their respective markets and remain flexible in meeting
their technology and product demands. We remain focused on executing as
efficiently and effectively as possible in this uncertain economic
environment."

The company today also announced that, effective immediately, Adam Wray
has stepped down from his role as its Executive Vice President of the Storage
Infrastructure Division and that Steve Barber will take a more active role in
leading this division. "I would like to personally thank Adam for his
contribution to the company and in his most recent role, for his dedication
and leadership in developing the Storage Infrastructure business to where it
is today. I wish Adam every success as he pursues other interests," said
Steve Barber.

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 second quarter of 2008 is projected to be in the range $232 to $252 million.
• Fully diluted earnings are anticipated to be between $(0.06) loss per share and $0.06 earnings per share on a GAAP basis in the second quarter. On a non-GAAP basis, fully diluted earnings per share are anticipated to be between $0.03 and $0.15.

Non-GAAP earnings per share excludes non-cash equity compensation, amortization of intangible assets, certain non-recurring items and related taxation expense.

Xyratex Ltd