Dataram: Fiscal 2Q11 Financial Results

Dataram Corporation reported its financial results for its fiscal second quarter and six months ended October 31, 2010.

Revenues for the second quarter and first six months of fiscal 2011 were $10.9 million and $23.7 million, respectively, which compares to $10.7 million and $19.9 million for the comparable prior year periods. The Company incurred a pre-tax net loss for the second quarter of the current fiscal year of $1.7 million which compares to a pre-tax net loss of $2.7 million for the comparable prior year period. Six month pre-tax net loss totaled $3.0 million versus $4.3 million for the prior sequential period.

John H. Freeman, Dataram’s president and CEO commented: "In the second quarter, our revenues and gross margin came under downward pricing pressure. Declining prices, along with our R&D investment in XcelaSAN were the primary contributors to our second quarter loss. Average selling prices in our memory business were lower by approximately 13 percent, when compared to first quarter levels. This was primarily due to the well-publicized industry wide decline in the price of memory. We are initiating actions to align our costs with our revenues. Those actions include the consolidation of our manufacturing facilities by the end of the current fiscal year as well as reducing our S, G & A expenses. Although we project continued growth in our memory solutions business, these actions should position the memory solutions business to operate profitably at current revenue levels."

Mr. Freeman continued: "The release schedule and development of our XcelaSAN product line is on track. In the second quarter, we released a product with enhanced features and functionality which increases its ease of use, ease of installation and interoperability. We have sold the first unit of our newly released version of XcelaSAN and have delivered and successfully installed systems at other clients. High Availability systems are scheduled for testing at customers this month and will be generally available in January. We anticipate that our enhancements and the shipment of High Availability systems will accelerate product sales and broaden market adoption. XcelaSAN is a unique intelligent Storage Area Network (SAN) optimization solution that delivers substantive application performance improvement to applications such as Oracle, SQL and VMware. XcelaSAN augments existing storage systems by transparently applying intelligent caching algorithms that serve the most active block-level data from high-speed storage, creating an intelligent, virtual solid state SAN. This breakthrough solution allows organizations to dramatically increase the performance of their business-critical applications without the costly hardware upgrades or over-provisioning of storage typically found in current solutions for increased performance."

The Company’s net loss for the second quarter was $1.7 million, or $0.19 per share which compares to a net loss of $1.6 million, or $0.18 per share for the comparable prior year period. Six month net loss totaled $3.0 million versus $2.6 million for the prior sequential period. The prior fiscal year’s second quarter and six month net loss includes an income tax benefit of $1.0 million and $1.7 million, respectively, on which the Company subsequently placed a 100% valuation allowance in its third quarter of fiscal 2010.

Mr. Freeman concluded: "We are taking the necessary actions to ensure that our memory solutions business is generating positive cash flow and growing. Our outlook for XcelaSAN is very robust, particularly as High Availability systems come to market."