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Dot Hill drops earnings outlook, cuts workforce by 30%

The economic freefall has once again struck the storage industry.

Dot Hill Systems Corp., Carlsbad, Calif., is lowering its revenue forecast for the first quarter of 2001 to the range of $16 to $20 million, down sharply from the fourth quarter of 2000 in which the company saw a revenue of $30.7 million and a 45% increase in sales of its SANnet product line.

The economic backlash has forced Dot Hill to cut costs. The company is chopping its workforce by 30% bringing its total number of employees down from more than 400 to about 300.

"Dot Hill is unfortunately not immune to the current economic situation," said Richard Search, senior vice president of marketing and product development at Dot Hill. "In order to effectively manage our business during these very trying times, we have reduced our operating expenses and personnel in order to be consistent with current market conditions," said Search.

The company said the personnel cuts were across the board except for its engineering and marketing divisions. "We have preserved our investments in marketing and engineering," said Search.

In a press release last week James Lambert, the company's chief executive officer said "We are disappointed with our recent results and recognize our need to take action in the face of very trying market conditions."

"We have seen numerous customers delay purchasing decisions during this economic downturn, particularly in February and March, due to budget freezes, workforce reductions and general uncertainty. This is particularly true in the telco and Internet sectors, where our products prove to be successful," added Lambert.

The company said the shortfall is due, in part, to lower revenues and charges related to severance and restructuring plans. In a statement last week Dot Hill said it is still analyzing the impact of these charges and circumstances on current quarter earnings and that it will not comment on future quarterly results because the unreliable economy is making an accurate forecast difficult.

The goal for now is to reduce losses and focus on long-term profitability, according to the company. Dot Hill said it is "cautiously optimistic about the future of information storage."

Dot Hill's products include storage area networks (SANs) and NEBS-certified systems for Telco and Internet operations. It's SANnet series of storage systems are designed for single to multi-server environments and can be used with stand-alone servers, server clusters, or as part of a SAN.

Dot Hill's not alone. The once invincible storage sector has taken a series of hits in recent months. Network-attached storage vendor Connex, Inc., Compaq, Dell, and even storage giant EMC have let go of a significant number of employees.

Dot Hill is scheduled to release official first quarter results at the end of April.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor

For more information:

Executive vision: Dot Hill targets storage's sweet spot

Sources say Connex slashes staff

EMC cuts hundreds of employees, says move is routine

Dig Deeper on Storage vendors

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