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CommVault says its sales took a hit last quarter

After a couple of strong quarters with its Simpana backup and storage management software fueled by data deduplication, CommVault sales tumbled last quarter.

CommVault today gave preliminary revenue results for last quarter of approximately $66.3 million, below the approximately $71.7 million financial analysts expected. The new forecast would be about a 10% increase from a year ago and a 10% decrease from the previous quarter.

“We had a big miss here,” CommVault CEO Bob Hammer said on a conference call to discuss the results. Hammer called the results “very disappointing,” “surprising” and “unacceptable” and blamed the problems mainly on a restructured sales force.

“This was not the result of losing deals to a competitor,” he said.

Hammer said the reason for restructuring was to concentrate on more enterprise deals. He said after a strong previous quarter, the company overestimated its ability to close deals last quarter.

“We underestimated the distraction to our sales force and the ability to close forecasted deals by the end of the quarter,” he said. “To put it bluntly, we could’ve managed these processes more effectively.”

Still, he said he did not regret making the changes and he expects the “vast majority” of deals that slipped will close this quarter.

Hammer said market conditions in the U.K. and Europe also added to the problems. He said it is taking longer for companies to make buying decisions in those areas, resulting in an “unprecedentedly low level” of close rates. Government sales were also lower than he expected.

Hammer said he still expects CommVault’s revenue for the year to grow in double-digits, which would likely require strong sales this quarter. He said many deals that slipped past the end of last quarter have closed and CommVault is off to a good start for this quarter.

Hammer said he took a close look at the deals that did not close, and was confident those customers did not buy a competitor’s product. When asked about any changes in the competitive landscape, he said Symantec was weaker and EMC stronger, although he maintains that CommVault partner Dell’s decision to OEM EMC’s Data Domain deduplication target “wasn’t a major issue.” When asked about EMC’s products that compete with CommVault’s Simpana, Hammer said, “Legato [backup software] is still a relatively weak product. They’re doing well with Data Domain and OK with Avamar.”

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