Dot Hill Updates Guidance for 2Q08

Dot Hill Systems Corp. has updated its earnings guidance for the second quarter of 2008.

For the second quarter of 2008, the company is targeting revenue in the range of $66 to $70 million. This is in line with the revenue guidance the company issued on May 8, 2008. The company has adjusted its targeted second quarter 2008 net loss to a net loss per fully diluted share in the range of $0.12 to $0.16 on a non-GAAP basis which excludes share-based compensation expense, foreign currency gains or losses, severance and restructuring expenses. This compares to the guidance the company issued on May 8, 2008 for a targeted non-GAAP net loss per fully diluted share in the range of $0.07 to $0.10. The company attributes the downward adjustment in its net loss per share guidance primarily to actual versus projected shifts in product and customer mix resulting in lower than expected product margins, higher than expected expenses associated with the ramp of production for its newest Tier-1 OEM customer and increased freight charges.

Additionally, the company is projecting cash and cash equivalents as of June 30, 2008 to be in the range of $61 to $65 million, as compared to cash and cash equivalents of $77.4 million as of March 31, 2008. The decrease in cash is largely attributed to higher than expected working capital requirements associated with the ramp of production for the company’s newest Tier-1 OEM customer and projected second quarter 2008 operating losses.