From the company directly:
SAN DIEGO, Nov. 13, 2000 – JNI® Corporation (Nasdaq:JNIC) today
issued the following prepared statements for today’s conference call
regarding news reports that appeard Friday, Nov. 10 on JNI
Corporation.
Chris Wildermuth, director of corporate communications, issued the
following statement: “We are holding this conference call today
because two articles appeared on Friday, Nov. 10 that we believe had
a negative effect on our stock price.
“The first article, from The Street.com, included quotes taken out of
context from JNI’s CEO and quotes from an individual identified in the
article as a short-seller, who we believe reaches erroneous conclusions
about JNI’s business.
“The second was a series of articles by Dow Jones Newswire which
erroneously stated that JNI was concerned about revenue from SBus
because Sun Microsystems was planning to discontinue the SBus
interface; and that the company was replacing CEO Terry Flanagan.
Following the publication of this article, the stock began dropping
faster than the overall market, which was in a selloff over worries
about technology sector earnings and uncertainty in the Presidential
Election. Regrettably, Dow Jones published their stories before they
called JNI to independently verify the information.
“Before the company could effectively address the stories, there was a
run on the stock, we believe largely led by momentum-oriented
day-traders, sending the stock down 38 points for the day. At that
point, Nasdaq agreed to our request that trading be halted.
“We contacted Dow Jones Newswire to inform them the information
they portrayed as news had in fact been discussed previously in
disclosure documents and in our Third Quarter Conference Call. While
Dow Jones included some of JNI’s comments, they also misrepresented
a fund manager’s position about not knowing the information, causing
further confusion about what was known by investors.
“Dow Jones issued a correction to their story, replacing four earlier
stories. Regrettably, this was after the close of deadline for most
financial publications and news services. The correction, issued at 5:44
p.m. Eastern Time, reads in part: “Those items mistakenly implied that
the company was reporting for the first time information about risks
associated with Sun Microsystems products and CEO Flanagan. The
2:44 p.m. item also misrepresented comments by a fund manager.”
“That summarizes Friday’s events. Dr. Flanagan would now like to
address the substantive issues brought up by Friday’s stories.
Terry M. Flanagan, Ph.D, president and CEO, made the following
statement: “First, I’d like to address my planned retirement. This is not
a story. It has been disclosed in the secondary, and in our third
quarter conference call, and was well known by analysts and investors
who follow the company on a regular basis. This is a planned
succession, and even though I will be 63 years old in January, I will
stay on forever if necessary, until we find what we are looking for: an
extraordinarily talented CEO who will take JNI to the next level. The
challenges JNI faces in the future involve managing rapid growth amid
rapid technological change, in an international arena. While I am
confident in my abilities, we have had a search in process to find a
CEO experienced in these areas, and that search is narrowing. My
sweet spot of experience was helping identify the Fibre Channel market
opportunity and leading the team through product development and
deployment of our first and second-generation products. I intend to
remain available to the company for all matters, but in particular in this
area of my expertise. In addition, I will continue to serve as an active
member of the Board of Directors.
“Let me emphasize again, I am not abandoning JNI. Rather, we intend
to add experience and leadership to our already talented management
team.
“Second, about the assertion that Sun Microsystems will eventually
phase out the SBus interface from its servers. This was excerpted from
our “risk factors disclosure.” We have consistently identified this as a
risk in every document we have ever filed with the SEC.
“Sun Microsystems has never, and I repeat, never, made any kind of
announcement that they would eliminate the SBus from their Enterprise
Servers. On Saturday, Sun spokesperson Elizabeth McNichols told the
San Diego Union-Tribune, quote: “We have used JNI's interface for a
number of years and our enterprise servers are still using it.”
“Sun’s Web site promotes the SBus interface, stating that more than 3
million SBus slots have been shipped as of 1999. In addition, Sun has
recently introduced an updated line of their Enterprise servers that
include up to 64 SBus slots. From all indications in the market today,
from Sun, our major OEMs and our key customers, SBus is strong and
growing.
“Addressing a growing PCI market has been central to JNI’s strategy
for several years. Our goal has been to build a strong base of products
using the PCI bus, and to eventually migrate from SBus to PCI bus as
the market dictates. In addition, PCI supports all types of operating
systems, whereas SBus runs only under Solaris operating system. By
introducing PCI products, JNI has been able to broaden its support to
servers running all the major operating systems used in storage
networks today: Solaris, Windows NT and Windows 2000, HP-UX, AIX,
Novell NetWare, and Mac OS.
“Which leads to a final point about the SBus report from Friday, which
implied that Sun is our major customer and that they buy 80% of our
HBAs, such that a decision by Sun not to purchase our products would
make this business go away. Nothing could be further from the truth.
Sun is an OEM customer, but not a major customer for JNI. We have
OEM contracts with all of the major storage system vendors in the
world.
“In summary, nothing has fundamentally changed concerning the SBus
market since we went public. If anything, the market has outperformed
our expectations.
“Finally, I know that some of you have asked for additional guidance
for the quarter. As we had previously planned, we will update investors
on the business for the fourth quarter in early December, and therefore
won’t be providing additional guidance at this time. It would be
imprudent of us to allow erroneous reports to dictate our investor
communications policy.”
A complete replay of the statement, along with the question and
answer session, will be available today after 11:00 a.m. EST by calling
800-633-8284 or 858-812-6440 and entering the reservation number
16939299 or via Webcast at www.vcall.com or www.jni.com.
About JNI Corporation
JNI Corporation is the fastest-growing Fibre Channel host bus adapter
company and the #2 manufacturer of Fibre Channel HBAs
(non-captive) in 1999 in revenue according to IDC (3/00). JNI offers a
broad line of HBAs, ASICs and software for storage area networks
(SANs). JNI’s PCI products operate on Solaris, Windows 2000, Windows
NT, HP-UX, AIX, Novell, Linux and Mac OS systems. JNI’s SBus
products run on Solaris. Customers include Amdahl, Avid, Chaparral,
Compaq StorageWorks, Consan, EMC, Eurologic, Hewlett-Packard,
Hitachi Data Systems, IBM, LSI Logic, McData, StorageTek and Sun
Microsystems. Company headquarters are in San Diego, with offices
throughout the U.S. and Munich (München), Germany. www.jni.com.
JNI – First in Fibre Channel™
# # #
Forward Looking Statements
With the exception of historical information, the statements set forth
above include forward-looking statements that involve risk and
uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. These risks include the
growth and size of the SBus market, our dependence on a small
number of OEM and distribution channel customers; increasing
competition in the Fibre Channel market; our reliance on the principal
members of our management team and our need to continue to attract
and retain key managerial personnel; our exclusive focus on Fibre
Channel products; rapid technological change in our industry; changes
in the storage area networks market; the long sales cycle for our
products; declining average selling prices of our products; and other
risk factors discussed in the company's Annual Report on Form 10-K,
10-Q and other reports filed with the Securities and Exchange
Commission, including the Company’s most recent Form S-1 filed on
Sept. 26, 2000.
# # #
JNI, JNIC and First in Fibre Channel are trademarks or registered
trademarks of JNI Corp. All other trademarks are the property of their
respective holders. |
