Dot Hill Reduces Workforce by 10%

Dot Hill Systems Corp. announced that its board of directors had completed its review of potential restructuring and cost reduction opportunities and decided to implement a restructuring plan that will include severance costs and fees associated with facility reductions in the range of $1.25 million to $1.75 million. The company’s board of directors also plans to consider additional restructuring measures as needed.

Included in the restructuring plan is a 10 percent reduction in workforce, the majority of which will be completed in the current quarter. While the company was originally planning to consolidate most of its United States operations into Longmont, Colorado by the middle of 2009, in light of the current macro economic environment, it will now defer the facilities move until 2010 in order to preserve cash. Instead, the company currently plans to shut down approximately 40 percent of its Carlsbad facility by the end of the fourth quarter of fiscal 2008.

"We expect the restructuring measures we have taken to result in savings of $2.5 million to $3.5 million in 2009," stated Hanif Jamal, Dot Hill’s senior vice president and chief financial officer. "We will continue to consider additional expense reduction opportunities throughout 2009. We are very focused on reducing our operating losses and returning to profitability as soon as possible."

The company’s president and chief executive officer, Dana Kammersgard stated: "We have undertaken these cost-saving initiatives in the context of the global recession and its uncertain potential impact on the demand for our products. We continue to remain focused on executing on programs for our Tier-1 and other customers, while improving gross margins through product cost reductions and increased software sales. The actions we have announced today serve to lower our breakeven point. We intend to return to profitability and I remain cautiously optimistic about 2009."

The company also reiterated the guidance it issued on November 6, 2008 for fourth quarter 2008 net revenues in the range of $70 million to $76 million and a net loss per fully diluted share of $0.05 to $0.10 on a non-GAAP basis, which excludes the effects of share-based compensation expense, severance and restructuring charges and currency gains and losses.