Overland: Fiscal 1Q11 Financial Results

Overland Storage, Inc. reported first quarter results for its fiscal quarter ended September 30, 2010.

"While revenue declined sequentially, we view this in line with the typical first quarter seasonality that has affected our business in prior years," said Eric Kelly, President and CEO of Overland Storage. "In the past quarter, we have expanded our channel footprint and successfully launched several new products. We also recently completed additional financing, and remain confident in the progress we are making to execute on our strategy to grow our branded products revenue as our OEM business declines."

During the first quarter of fiscal 2011, net revenue declined 8.8% from the same period a year ago, due to the expected reduction of revenue in our OEM channel. Branded net revenue remained relatively constant year over year. Helping to minimize the decline was the successful market acceptance of new Snap Server N2000 NAS product, growth of sales in our NEO Series of tape based products, and entry into the mid-range SAN market with the SnapSAN S2000.

Selected first quarter results:

• Net revenue for the first quarter of fiscal 2011 declined 8.8% to $17.6 million from $19.3 million in the same period a year ago, primarily attributable to an anticipated decrease in OEM revenue from HP.
• Net loss was $6.5 million for the first quarter of fiscal 2011, including a non-cash charge of $1.0 million for share-based compensation expense.
• Snap Server and SnapSAN series of disk based products saw an increase of 22% year over year, driven primarily by the Snap Server N2000 and the SnapSAN S2000.
• NEO Series of branded tape products saw an increase of 52%, over the same quarter last year primarily driven by the introduction of the NEO S Series product line in the second quarter of fiscal 2010.
• Cash at September 30, 2010, was $4.3 million.

"During the first quarter of fiscal 2011, we continued to focus on building revenue momentum through the introduction of new products, increased engagement with value-added resellers, and focused sales and marketing initiatives," said the company

Key business highlights:
The company entered the 2U NAS market with the introduction of the Snap Server N2000 which has become one of the fastest selling rack-mount products in Snap Server history.
The company finalized preparations for the launch of the SnapSAN S1000, a new entry into the midrange SAN marketplace. The solution was announced shortly after quarter-end and will begin shipping in the second quarter of fiscal 2011. The S1000 was designed to anchor SnapSAN portfolio and expand total available market.
The company completed the purchase of the intellectual property of Maxiscale Inc. By integrating Maxiscale’s technology into GuardianOS, it intends to transform the Snap Server product line into a scalable storage solution with linear performance and capacity expansion, a global namespace and no single point-of-failure.