Xyratex: Fiscal 1Q09 Financial Results

Xyratex Ltd. announced results for the first fiscal quarter ended February 28, 2009. Revenues for the first quarter were $183.9 million, a decrease of 15.3% compared to revenues of $217.1 million for the same period last year.

For the first quarter, GAAP net loss was $16.1 million, or $0.55 per share, compared to GAAP net loss of $2.2 million, or $0.08 per share, in the same period last year. Non-GAAP net loss was $10.8 million, or $0.37 per share, compared to non-GAAP net income of $0.7 million, or $0.03 per share, in the same quarter a year ago.

Gross profit margin in the first quarter was 11.4%, compared to 15.1% in the same period last year, primarily due to the reduction in margin in the Networked Storage Solutions division as a result of higher overheads and changes in customer mix.

Revenues from our Networked Storage Solutions products were $165.7 million as compared to $187.8 million in the same quarter a year ago, a decrease of 11.7%. Gross profit margin in the Networked Storage Solutions business was 11.1% as compared to 14.7% a year ago. Revenues from our Storage Infrastructure products were $18.2 million as compared to $29.3 million in the same quarter a year ago, a decrease of 38%. Gross profit margin in the Storage Infrastructure business was 15.2% as compared to 18.9% a year ago.

"The global economic environment has created some challenging business conditions that we are working through with our customers. This led us to take corporate restructuring actions during the quarter which have provided annualized expense savings in excess of 10% compared with 2008. We have now decided to take additional actions during the second quarter which will further reduce annualized expense by 10-15%. This was a very difficult decision, but we believe our actions will best position the company for the future," said Steve Barber, CEO of Xyratex. "Although visibility remains limited in the near term, I believe there are early signs of market demand stabilizing and that our customers are taking the right actions to position themselves for growth within their respective markets. We remain focused on executing as efficiently and effectively as possible in this uncertain economic environment."