ZOOX Earnings
Investor Relations
Gadzoox Networks, Inc. (ticker: ZOOX, exchange: Nasdaq) News Release - Monday,
October 25, 1999
Gadzoox Networks Reports Record Results for Second
Quarter
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 25, 1999--Gadzoox Networks,
Inc. (Nasdaq:ZOOX), a leading provider of SAN (storage area network)
products, today reported record results for the second quarter of fiscal 2000
ended September 30, 1999.
For the quarter, the Company recorded net revenues of $11.1 million, an 89
percent increase over net revenues of $5.9 million reported for the quarter ended
September 31, 1998.
The Company reported a net loss of $1.9 million for the quarter ended
September 30, 1999, an improvement of $1.7 million over the $3.6 million loss
in the comparable period of the prior year. The Company's pro-forma net loss
for the quarter ended September 30, 1999 was $0.08 per share compared with a
pro-forma net loss of $0.21 per share for the comparable period of the prior
year.
The Company's gross margin also improved to 43% for the quarter ended
September 30, 1999, up from 25% for the same quarter in fiscal 1999 and up
from 41% for the quarter ended June 30, 1999, the Company's first fiscal
quarter of fiscal 2000. On July 20, 1999, Gadzoox completed its initial public
offering of 4,025,000 shares of its common stock from which the Company
received net proceeds of approximately $77.5 million.
"We are extremely pleased with our second quarter results," said Bill Sickler,
Gadzoox president and chief executive officer. "In addition to posting record
revenues, we made significant strides in three other key areas: increased gross
margin, increased manufacturing capacity and commencement of shipments of
our Capellix switch product. With the addition of the Capellix switch, Gadzoox'
products address the widest range of market requirements from entry-level hubs
to high-end switches."
The Company began shipment of its Capellix modular SAN switch. With the
ability to be configured with up to 34-ports, the Capellix switch offers the
industry's highest port density to support large server clusters, such as the
32-node clusters enabled by Novell's NetWare Cluster Services (NCS) and
Microsoft's Windows 2000 operating system. In conjunction with the launch of
NCS, Novell approved the Capellix product for use as a reference switch for
NCS clusters. The NCS product, powered by a Gadzoox SAN, was awarded
Best-of-Show honors at the Network+Interop show that took place in Atlanta,
Georgia from September 15 through 17. In conjunction with the availability of
the Capellix switch, Gadzoox is actively working to qualify the product at
leading system and storage OEMs.
The Company also announced that it has maintained its leading position in SAN
management with the release of its Ventana SAN Manager version 3.0 software
product. The Ventana SAN management product is the first to comply with a
new SAN management specification that was recently made available by the
Internet Engineering Task Force (IETF). Working in concert with industry
leaders such as EMC Corporation, Gadzoox contributed to the efforts of the
FibreAlliance group to accelerate the development of and deployment of
products to the new specification.
To assist in the assessment of trends and opportunities in the dynamic
environment of the SAN market, the Company has formed a Technical
Advisory Board. The new group is tasked with providing strategic guidance to
the Company in the areas of new technologies and business development. The
Technical Advisory Board will be chaired by Alistair Black, founder and chief
technical officer, and will include Howey Chin, chief strategy officer and Wayne
Rickard, senior vice president of research and development. To focus on their
new roles, Dr. Black and Mr. Chin will transition out of their day-to-day
responsibilities at the company.
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 Capellix(tm)
(modular and highly scalable switch).
About Gadzoox Networks, Inc.
Gadzoox Networks, Inc. (Nasdaq:ZOOX) is a leader in SAN (storage area
network) products. The 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. -0-
Condensed Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
Sept. 30, Sept 30, Sept. 30, Sept 30,
1999 1998 1999 1998
Net revenues $ 11,081 $ 5,851 $ 20,292 $ 11,257
Cost of revenues 6,325 4,412 11,740 8,593
Gross margins 4,756 1,439 8,552 2,664
Operating expenses:
Research and development 4,540 3,411 8,458 6,523
Sales and marketing 1,914 1,240 3,802 2,587
General and administrative 866 301 1,629 563
Amortization of deferred
compensation 321 87 643 115
Total operating expenses 7,641 5,039 14,532 9,788
Loss from operations (2,885) (3,600) (5,980) (7,124)
Net loss $ (1,949) $ (3,640) $ (5,185) $ (7,185)
Basic net loss per share $ (0.09) $ (0.75) $ (0.39) $ (1.56)
Weighted average shares
used in computing net
loss per share 21,199 4,730 13,455 4,600
Pro-forma basic net loss
per share $ (0.08) $ (0.21) $ (0.24) $ (0.42)
Weighted average shares
used in computing
pro-forma basic net
loss per share 24,222 17,051 21,891 17,202
Selected Balance Sheet Data
September 30, March 31,
1999 1999
(unaudited)
Cash and short-term investments $ 82,996 $ 12,202
Total current assets 97,196 23,794
Total assets $102,168 $ 28,598
Current liabilities $ 8,112 $ 7,882
Total liabilities 13,548 22,939
Total equity $ 88,620 $ 5,659
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