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Overland: Fiscal 4Q13 Financial Results

Under $50 million in sales for the year, to the edge of the abyss

 (in $ million) 4Q12  4Q13 FY12  FY13
 Revenue 15.3 12.1 59.6  48.0
 Growth    -21%    -19%
 Net income (loss) (2.7) (5.4) (16.2) (19.6)

Overland Storage, Inc. reported financial results for its fiscal 2013 fourth quarter and full fiscal year ended June 30, 2013.

"We made progress in fiscal 2013 with the growth of our new branded products, including our SnapServer DX series, which grew more than 60% year-over-year," said Eric Kelly, president and CEO, Overland Storage. "The positive market traction we are seeing with our new branded products and services helped drive gross margin improvement in fiscal 2013 and we expect these branded products to continue to contribute to growth and gross margin improvement in the new fiscal year.

"Our recently announced partnership with Sphere 3D will enable us to introduce a new product line this fiscal year designed to enable enterprises and individuals to securely access applications with full functionality from their mobile devices. The solutions will be delivered as an appliance or as a cloud offering. We expect these new product offerings to give mobile business users the full functionality of software programs or applications on any device, anywhere, anytime, eliminating the application limitations and reducing data management and security problems created by the BYOD phenomenon.

"We are excited about the new market opportunities created by this new product line, and opportunities to drive additional sales of our branded storage products through our partnership with Sphere 3D, which includes a supplier agreement under which they will procure their cloud infrastructure solutions from Overland, and a licensing agreement giving us the rights to sell, distribute and license their technology to the commercial market worldwide."

Highlights:

  • SnapServer DX series product revenue in fiscal 2013 grew 63% year-over-year to $6.2 million.
  • Tape revenue increased 15% in the fourth quarter compared to the preceding quarter.
  • Total product revenue, including both tape and disk revenue increased 10% in the fourth quarter compared to the preceding quarter.
  • Gross margin for fiscal 2013 increased nearly 300 basis points year-over-year to 35.0%.
  • Announced new partnership and the development of an integrated solution delivering scalable storage and the full functionality of any software program or application onto any mobile device anywhere, anyplace, anytime.
  • SnapScale clustered NAS solution won the Editor’s Choice Award for Hardware Product of the Year at The Storage Awards 2013.
  • SnapScale X2 won Favorite Storage Hardware Product at the 2013 People’s Choice Stevie Awards.

Fiscal Fourth Quarter Financial Results

  • Net revenue for the fourth quarter of fiscal 2013 was $12.1 million, compared to $15.3 million for the fourth quarter of fiscal 2012 and $11.6 million in the third quarter of fiscal 2013.
  • Product revenue for the fourth quarter of fiscal 2013 was $7.6 million, compared to $9.4 million for the fourth quarter of fiscal 2012 and $6.9 million in the third quarter of fiscal 2013.
  • Gross margin for the fourth quarter of fiscal 2013 improved to 36.5%, compared to 31.6% in the fourth quarter of fiscal 2012 and 33.1% in the third quarter of fiscal 2013.
  • Operating expenses for the fourth quarter of fiscal 2013 were $9.4 million, compared to $8.5 million in the fourth quarter of fiscal 2012 and $9.0 million for the third quarter of fiscal 2013.
  • Stock compensation expense was $1.1 million in the fourth quarter of fiscal 2013, compared to $1.2 million for both the fourth quarter of fiscal 2012 and the third quarter of fiscal 2013.
  • Depreciation and amortization was $0.3 million in the fourth quarter of fiscal 2013 compared to $0.5 million in the fourth fiscal quarter of 2012 and $0.3 million in the third quarter of fiscal 2013.
  • Net loss for the fourth quarter of fiscal 2013 was $5.4 million, or a loss of $0.18 per share, compared to a net loss of $2.7 million, or a loss of $0.10 per share, in the fourth quarter of fiscal 2012 and a net loss of $5.1 million, or a loss of $0.17 per share, in the third quarter of fiscal 2013.

Fiscal 2013 Financial Results

  • Net revenue for fiscal 2013 was $48.0 million, compared to $59.6 million for fiscal 2012.
  • Product revenue for fiscal 2013 was $28.8 million, compared to $35.4 million for fiscal 2012.
  • Gross margin for fiscal 2013 increased to 35.0%, compared to 32.1% for fiscal 2012.
  • Operating expenses for fiscal 2013 were $35.7 million, compared to $36.2 million for fiscal 2012. Stock compensation expense, included in operating expense, for fiscal 2013 was approximately $4.6 million, compared to $4.9 million for fiscal 2012. Depreciation and amortization for fiscal 2013 was approximately $1.2 million, compared to $1.6 million for fiscal 2012.
  • Net loss for fiscal 2013 was $19.6 million, or a loss of $0.68 per share, compared to a net loss of $16.2 million, or a loss of $0.66 per share, for fiscal 2012.
  • Cash and cash equivalents at June 30, 2013 was $8.8 million, compared to $10.5 million at June 30, 2012. At June 30, 2013, the company had $3.5 million outstanding under its credit facility and $13.25 million outstanding under its convertible notes.


To read the earnings call transcript

Comments

With such poor financial results, how Overland will be able to survive? That's the question.

   Sales of Overland since 2006

  FY* Revenue
Y/Y Growth  Loss
 2006   209.0      -11%  14.6
 2007   160.4      -23%  44.1
 2008   127.7      -20%  24.6
 2009   105.6      -17%  18.0
 2010    77.7      -26%  13.0
 2011    70.2      -10%  14.5
 2012    59.6      -15%  16.2
 2013    48.0      -19%  19.6
 * ended June 30

Moreover, the company could be delisted from Nasdaq and is embarked in several patent infringement suites.

We don't see any firm really being interested to acquire this storage company - founded in 1980 (as Overland Data) and never able to rebound from its old successful tape activity - at a good price. Enterprise value is only at $39 million for Yahoo! Finance, and the share was priced at $1.19 today.

                                Share's price since one year

overland_4q13_540

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