ZOOX earnings out, double new revs. from same quarter one year ago. See the stock ramping down with MM games on the open and then up from there. By this report looks like a hold from here.
BW0362 JAN 13,2000 13:46 PACIFIC 16:46 EASTERN
( BW)(CA-GADZOOX-NETWORKS)(ZOOX) Gadzoox Networks Reports Record Results for Third Quarter
Business Editors
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 13, 2000--Gadzoox Networks, Inc. (NASDAQ: ZOOX), a leading provider of SAN (storage area network) products, today reported record results for the third quarter of fiscal 2000 ended December 31, 1999. For the quarter, the Company reported record net revenues of $12.6 million, a 110% increase over net revenues of $6.0 million reported for the quarter ended December 31, 1998.
In addition to the record revenues, the Company exceeded analysts' expectations on revenues generated by its Capellix switch product. As an indication of the Company's success in penetrating the SAN switch market during the quarter, net revenues from shipments of the Capellix switch exceeded 25% of total net revenues. Also during the quarter, the Company continued to expand its business in the indirect channel with 37% of net revenues coming from shipments to channel partners for the quarter ended December 31, 1999, up from 29% for the quarter ended September 30, 1999.
Gross margin and earnings performance also reached record levels for the third quarter. Gross margin improved to 45% for the quarter ended December 31, 1999, up from 24% for the quarter ended December 31, 1998 and up from 43% for the quarter ended September 30, 1999. The Company reported a net loss of $1.8 million for the quarter ended December 31, 1999, an improvement of $2.8 million over the $4.6 million loss in the comparable period of the prior year. The Company's pro-forma net loss for the quarter ended December 31, 1999 was $0.07 per share compared with a pro-forma net loss of $0.24 per share for the comparable period of the prior year.
"We are extremely proud of our accomplishments and our financial performance for our third fiscal quarter," said Bill Sickler, Gadzoox president and chief executive officer. "In a defining moment for the launch of our switching products we exceeded expectations for switch product shipments and successfully took market share from key competitors. We view this rapid growth as validation of our product and technology strategy and our commitment to drive the evolution of the market by delivering the right products at the right time of market development."
Launch of Capellix Switch
The third fiscal quarter represented the first quarter of fully released volume shipments for the Company's Capellix modular SAN switch. During the quarter, the product accomplished a number of significant achievements. In addition to exceeding expectations on revenue, the product line was also awarded design wins for future systems with three customers. The Company attributes the rapid growth in revenue from its switch product to its state-of-the-art design which provides scalability, ease-of-integration and leading performance. As a point of independent validation of the product's strengths, the Capellix switch was selected for use in a TPC-C benchmark test which resulted in record setting performance for a Microsoft Windows NT system which nearly doubled the previously set performance mark for transactions per minute (based on TPC-C configurations tested as of December 1999.) In addition to enterprise applications such as those represented in the record setting TPC-C benchmark, the recent release of software enhancements have enabled the Company to pursue incremental opportunities in certain vertical applications, such as those involving digital video.
Expansion of Indirect Channel
Leveraging the Company's GAIN (Gadzoox Associates In Networking) partner program, Gadzoox expanded its number of channel partners to over 120 active partners in 23 countries during the third fiscal quarter. Based on the revenue from its channel partners, the Company believes that it leads the industry in three key measures of channel development: highest net revenues from shipments to the channel, highest percentage of total net revenues generated from shipments to the channel and the largest number of active worldwide channel partners. The Company believes that leadership in the channel is important to addressing the needs and opportunity of the SAN market and can help enhance overall gross margin.
SAN Management Leadership
During the quarter ended December 31, 1999, Gadzoox continued to hold a leading position in SAN management. At the Comdex Fall convention in November, the Company demonstrated its Capellix switch with Novell Directory Services (NDS). As the first SAN switch to be NDS enabled, Gadzoox extended its partnership with Novell and reinforced its commitment to open standards for SAN management. Also during the quarter, a major OEM customer released a customized version of Gadzoox' Ventana SAN manager which was integrated into the OEM's storage management utility. The Company believes that this is the first time that a SAN management application has been integrated with a system OEM's management application.
Management
Following the organizational changes announced in October 1999, the Company announces the addition of two new executive officers:
Michael Parides has joined the Company as vice president of advanced SAN solutions. Under the newly created position, Mr. Parides will be responsible for leading the Company's efforts in the development of products and markets for advanced SAN-based storage solutions. Mr. Parides brings over 15 years of experience in high technology management in the storage and computer systems industry most recently as group vice president and worldwide director of the Computer Systems, Storage, Software and Peripherals Group at Dataquest/Gartner Group. Prior to that, Mr. Parides served in executive management positions at Quantum Corporation, IBM Corporation and Compaq Computer.
Stephen Dalton has joined the Company as vice president of development engineering. Mr. Dalton brings over 18 years of experience in engineering and corporate management. Over his career Mr. Dalton has amassed extensive experience in server, storage, I/O and networking technologies. Most recently, Mr. Dalton was vice president of engineering at Force Computers. Prior to that position, Mr. Dalton held executive management positions at Auspex Systems, StreamLogic, Storage Dimensions and Silicon Graphics. Mr. Dalton will be responsible for the development of all SAN infrastructure hardware and software products at the Company.
In related changes, the Company announces that Dr. Alistair Black, co-founder and chief technical officer, Howey Chin, chief strategy officer, and Kurt Chan, vice president of development have left the Company to pursue other interests.
The statements in this news release relating to future events or predictions involve known and unknown risks and uncertainties which may cause Gadzoox' actual results in future periods to be materially different from any performance suggested in this release. Such factors may include, but may not necessarily be limited to, fluctuations in customer demand, both in timing and in volume, the fact that the SAN market is new and evolving, the Company's dependence on a limited number of products, a significant portion of which are sold to a limited number of partners, the Company's dependence on its contract manufacturer, competition in the Company's industry and the timing of new technology and product introductions. Further, the Company operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond the Company's control. In the context of forward looking information provided in this news release, reference is made to the discussion of risk factors detailed in the Company's registration statement on Form S-1 filed with the Securities and Exchange Commission which became effective on July 19, 1999, as well as subsequent filings.
Gadzoox Networks Offers Broad Line of SAN Products
Gadzoox, a leader in the SAN market, offers a broad range of advanced products including Bitstrip(tm) (gigabit Fibre Channel hub), Gibraltar(tm) (managed Fibre Channel hub), Ventana(tm) (SAN management software application), Denali(tm) (switch supporting embedded backup agent), and the performance record setting Capellix(tm) (modular and highly scalable switch).
About Gadzoox Networks, Inc.
Company provides networking solutions for enterprise storage with scalable, managed SAN solutions based on Gadzoox' Fibre Channel hubs, switches and management products. Serving as modular building blocks, Gadzoox' products are designed to address the growth in enterprise data through the evolving capabilities of SANs. According to the most recent Fibre Channel report from market research firm International Data Corporation dated January 1999, Gadzoox is the market share leader in combined hub and switch port shipments in 1997 and 1998. Gadzoox is an ISO 9001 certified Company. Gadzoox corporate headquarters is located at: 5850 Hellyer Avenue, San Jose, CA 95138. For more information, visit the company's Web site at www.gadzoox.com or call 888.423.3222.
Gadzoox Networks, Inc.
Condensed Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
Net revenues $ 12,561 $ 5,983 $ 32,852 $ 17,240
Cost of revenues 6,903 4,550 18,642 13,143
Gross margin 5,658 1,433 14,210 4,097
Operating expenses:
Research and development 4,461 3,750 12,919 10,273
Sales and marketing 2,742 1,577 6,544 4,164
General and administrative 959 434 2,587 997
Amortization of
deferred compensation 321 184 964 299
Total operating expenses 8,483 5,945 23,014 15,733
Loss from operations (2,825) (4,512) (8,804) (11,636)
Total other income
(expense), net 1,027 (51) 1,821 (112)
Net Loss $ (1,798) $ (4,563) $ (6,983)$(11,748)
Basic net loss per share $ (0.07) $ (0.93) $ (0.40)$ (1.49)
Weighted average shares
used in computing basic
net loss per share 25,614 4,915 17,523 4,826
Pro forma basic net
loss per share $ (0.07) $ (0.24) $ (0.30) $ (0.41)
Weighted average shares
used in computing pro
forma basic net loss
per share 25,614 18,659 23,137 17,654
Gadzoox Networks, Inc.
Condensed Balance Sheets
(In Thousands)
December 31, 1999
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 30,346
Short-term investments 49,242
Accounts receivable, net 9,986
Inventories 6,163
Prepaid expenses and other current assets 803
Total current assets 96,540
Property and equipment, net 5,420
Other assets 289
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$ 102,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable $ 291
Current portion of capital
lease obligations 1,503
Accounts payable 5,013
Compensation related accruals 1,497
Deferred revenue and other 1,069
Total current liabilities 9,373
Convertible note 4,290
Capital lease obligations,
net of current portion 1,398
Total liabilities 15,061
Stockholders' equity:
Common stock 129
Additional paid-in capital 124,597
Deferred compensation (1,461)
Accumulated deficit (36,077)
Total stockholders' equity 87,188
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$ 102,249
(Note to editor: Gadzoox and the Gadzoox logo are registered
trademark of Gadzoox Networks, Inc. Bitstrip, Denali, Gibraltar,
Ventana, SANtools and Capellix are trademarks of Gadzoox Networks,
Inc. All other trademarks are property of their respective owners.)
--30--lmm/sf*
CONTACT: Gadzoox Networks, Inc.
Investor Contact:
Christine Munson, 408/361-6191 (Chief Financial Officer)
investor-relations@gadzoox.com
or
Press Contact:
Dominique Pheiffer, 408/361-6143
Corporate Communications Manager
dominique@gadzoox.com |
