Overland Storage Raises Financial Guidance for Fiscal Years 2007 and 2008
January 10 2006 - 7:00AM
PR Newswire (US)
Incorporates Expected Benefits of New OEM Contracts SAN DIEGO, Jan.
10 /PRNewswire-FirstCall/ -- Overland Storage, Inc. (NASDAQ:OVRL)
today raised financial guidance for its fiscal years ending June
30, 2007 and 2008. Incorporated in this new guidance is the impact
of two new OEM contracts: a software license agreement for REO
Protection OS(TM) and a supply agreement for the company's new tape
automation product currently under development. Overland now
expects fiscal 2007 revenue to be in the range of $280 to $285
million, with non-GAAP earnings of $0.35 to $0.40 per diluted
share. Fiscal 2008 revenue is expected to be in the range of $320
to $330 million, with non-GAAP earnings of $0.75 to $0.85 per
diluted share. Non-GAAP earnings exclude a charge of approximately
$0.13 per diluted share in each year related to the amortization of
intangible assets which stem from the company's August 2005
acquisition of Zetta Systems. See "Non-GAAP Financial Measures"
below. GAAP earnings per diluted share are expected to be $0.22 to
$0.27 in fiscal 2007 and $0.62 to $0.72 in fiscal 2008. "Based on
new OEM business, we are raising our earnings guidance for fiscal
years 2007 and 2008, with expectations that results will almost
double our previous non-GAAP earnings guidance for these periods.
Additionally, we have taken a further step to reduce a portion of
the execution risk in our model by lowering the expected revenue
contributions from our new ULTAMUS(TM) product over the next 18
months. Our operations and engineering teams are working diligently
to support these new customers and products, and it is critical
that we make the necessary investments in fiscal 2006 to drive the
business in subsequent years. We are also pursuing a number of
other OEM opportunities that could provide incremental revenue and
operating profit contribution and leverage our new product
investments," said Christopher Calisi, president and chief
executive officer. The company will report earnings for its fiscal
2006 second quarter ended Dec. 31, 2005 on Jan. 26, 2006. It will
update guidance for the fiscal 2006 second half at that time.
Non-GAAP Financial Measures A "non-GAAP financial measure" is
defined as a numerical measure of a company's financial
performance, financial position or cash flows that excludes (or
includes) amounts that are included in (or excluded from) the most
directly comparable measure calculated and presented in accordance
with GAAP in the company's financial statements. Non-GAAP net
income or loss is used by investors and analysts of Overland as an
alternative to GAAP net income or loss when evaluating the
company's performance in comparison to other companies. In the
acquisition of Zetta Systems, the company recorded a $12.4 million
intangible asset (including the gross-up effect related to deferred
taxes) related to acquired technology which it will amortize to
cost of goods sold over four years, the estimated life of the
technology. The company began shipping the first product based on
this technology in December 2005. Because GAAP requires that the
intangible asset be amortized commencing immediately upon
acquisition, the amortization will result in negative or weak gross
profit for the product line and a depression of the company's
overall gross margin for some time. During the product introduction
ramp-up, management will evaluate the performance of this new
product line excluding the amortization charge, and allocate
resources based on such evaluation. The company therefore believes
that the non-GAAP results provide useful information to investors
concerning Overland's operating results, and permit a more
meaningful comparison to historical financial results, which did
not include these amortization charges or write-offs of in-process
R&D. The non-GAAP measures used by the company may not be
comparable to similarly titled measures used by other companies and
should not be considered in isolation or as a substitute for
measures of performance in accordance with GAAP. About Overland
Storage Now in its 25th year, Overland Storage is a market leader
and innovative provider of simply protected storage solutions --
smart data protection appliances and software modules designed to
work together, affordably, to ensure that information is
automatically safe, readily available and always there. Overland's
award-winning data protection solutions include the ULTAMUS
SERIES(TM) of protected primary storage appliances; the REO
SERIES(TM) of disk-based backup and recovery appliances; and the
NEO SERIES(R) of tape libraries. Overland sells its products
through leading OEMs, commercial distributors, storage integrators
and value-added resellers. For more information, visit Overland's
web site at http://www.overlandstorage.com/. Except for the factual
statements made herein, the information contained in this news
release consists of forward-looking statements that involve risks,
uncertainties and assumptions that are difficult to predict. Words
and expressions reflecting optimism and satisfaction with current
prospects, as well as words such as "believe," "intends,"
"estimates," expects," "projects," plans," "anticipates" and
variations thereof, identify forward-looking statements, but their
absence does not mean that a statement is not forward looking. Such
forward-looking statements are not guarantees of performance and
the company's actual results could differ materially from those
contained in such statements. Factors that could cause or
contribute to such differences include risks and uncertainties
associated with the company's acquisition of Zetta Systems, Inc.,
including possible integration difficulties and successful
execution of the business plan related to the acquisition; possible
delays in new product introductions and shipments by the company
including the new ULTAMUS line and the new tape automation platform
currently under development, including versions subject to the
company's new OEM contracts; possible delays in enhancements to the
company's REO line; market acceptance of the company's new product
offerings; the timing and market acceptance of new product
introductions by competitors; the speed at which HP transitions
from the products it currently buys from the company to its
next-generation products to be purchased from another vendor;
delays, unbudgeted expenses, inefficiencies and production problems
that may result from the transition of manufacturing to
Sanmina-SCI; worldwide information technology spending levels;
unexpected shortages of critical components; rescheduling or
cancellation of customer orders; loss of a major customer; the
timing and amount of licensing royalties; general competition and
price pressures in the marketplace; the company's ability to
control costs and expenses; and general economic conditions.
Reference is also made to other factors set forth in the company's
filings with the Securities and Exchange Commission, including the
"Risk Factors," "Management's Discussion and Analysis" and other
sections of the company's Form 10-K currently on file with the SEC.
These forward-looking statements speak only as of the date of this
release and the company undertakes no obligation to update publicly
any forward-looking statements to reflect new information, events
or circumstances after the date of this release. Overland, Overland
Storage, ULTAMUS SERIES, REO SERIES, NEO SERIES and PROTECTION OS
are trademarks or registered trademarks of Overland Storage, Inc.
DATASOURCE: Overland Storage, Inc. CONTACT: Vernon A. LoForti, CFO,
, or Cynthia A. Bond, Director of Corporate Communications, , both
of Overland Storage, Inc., +1-858-571-5555 Web site:
http://www.overlandstorage.com/
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