Vixel Announces Third Quarter 1999 Financial Results; Revenue from SAN Systems Products Increased 167 percent
BOTHELL, Wash.--(BUSINESS WIRE)--Oct. 26, 1999--Vixel Corporation (Nasdaq:VIXL), a
leading provider of Storage Area Network (SAN) solutions, today announced financial
results for its third quarter, ended October 3, 1999.
Total revenue for the 1999 third quarter was $8.9 million, which compares to $7.9
million in the third quarter of 1998, an increase of 13%. Revenue from the company's SAN
system products, which includes fibre channel switches and hubs, increased 167% to $6.6
million in the third quarter 1999, compared with $2.5 million in the same period a year
ago. As anticipated, component revenue continued to decrease and was $2.3 million in the
third quarter of 1999, down from $5.4 million in the same quarter last year.
For the nine months ended October 3, 1999, revenue increased to $31.0 million, from
$29.1 million during the comparable nine-month period in 1998. SAN systems revenue for
the nine months was up sharply, approximately 93 percent, to $17.4 million from $9.0
million in the same period last year.
Vixel's net loss for the third quarter of 1999 was $6.5 million, or $0.37 per share,
compared to a net loss of $4.9 million, or $0.32 per share in the third quarter of 1998.
The net loss for the nine months ended October 3, 1999 was $16.4 million, or $0.99 per
share, compared to a loss of $8.8 million, or $0.60 per share in the same period a year
ago. The 1998 results include a $9.1 million gain from the sale of a division. All
per-share amounts are computed on a pro forma basis, which assumes conversion of all
preferred stock from the original date of issuance.
Jim McCluney, president and CEO, Vixel Corporation, commented: "We are very pleased
with our accomplishments this quarter, particularly the positive customer response to our
new Vixel(R) 8100 Fabric Switch, and Vixel(R) 2100 Zoning Managed Hub, which began
shipping in June and September, respectively. Our third quarter revenue continued to show
healthy growth in our expanding SAN system product line. The SAN market presents a
compelling market opportunity as the typical IS manager is forced to manage substantially
more and more complex storage issues that require fully integrated, reliable, and
scalable solutions. That complexity is driving the demand for SAN switches, hubs, and
software."
The Vixel 2100 Zoning Managed Hub, supported by industry-leading SAN InSite(TM)
Management Software 2.2, allows on-the-fly creation of up to four independent loops, each
operating at 100 MB/second. The product is designed to restrict Loop Initialization
Primitives (LIP) from traveling across loops (zones), a capability typically only
available in more expensive switches. The product allows the development of lower cost
back-up, restore and multi-media applications. The Vixel 2100 is fully enabled by
Java-based SAN InSite 2.2 which also began shipping in September.
Vixel's common stock began trading on NASDAQ on October 1, 1999 following an initial
public offering of 4.3 million shares of common stock at $18.00 per share. The offering
was underwritten by BancBoston Robertson Stephens Inc., Bear, Stearns & Co. Inc., and
Needham & Company, Inc. On October 15, 1999, the underwriters purchased an additional
645,000 shares of common stock at $18.00 per share through the exercise of their
over-allotment option. Vixel realized total net proceeds from the offering of $82.8
million.
Third Quarter Highlights
-- Vixel's three new product introductions in the quarter included
the unveiling of its 2100 Zoning Managed Hub. Vixel also
introduced its Java-based SAN InSite version 2.2, which can be
directly installed on Sun Solaris, Microsoft NT 4.0, and Linux.
Also introduced in the quarter was the 5100 V-GLM, providing
full-speed transport of Fibre Channel data to host bus adapters
and other Fibre Channel devices.
-- Vixel and MetaStor Storage Solutions, a division of LSI Logic
Storage Systems, announced the certification of the Vixel 8100
Fabric Switch with the MetaStor S-Class storage system. The
company also joined Legato Systems' Celestra Consortium, a forum
to facilitate open technology.
-- Vixel named two new Premier Value-Added-Resellers - Polaris, a
leading systems integrator providing solutions for IT
infrastructure reliability, enterprise relationship management,
and storage networking; and CoComp, a provider of storage
management systems, backup and archival solutions to commercial
firms and government organizations.
-- In September, the Company announced the Vixel Integration Partner
(VIP) Program, designed to increase market presence and strength
of Vixel resellers through sales training courses, competitive
information, discounted demo equipment and early access to new
products.
-- In July and August, Vixel announced the appointment of three key
vice presidents to oversee worldwide sales, customer satisfaction
and corporate quality, and marketing.
Except for historical information contained herein, this news release contains
forward-looking statements that are subject to risks and uncertainties that may cause
actual results to differ materially from the results discussed in the forward-looking
statements. Factors that may cause such a difference include risks affecting development
of the SAN market, the competitiveness and performance of Vixel's products in this
rapidly changing market and the ability of Vixel to meet evolving product standards
required by customers and others involved in the distribution channel for SAN products.
Further information on the factors and risks that could affect Vixel's business,
financial condition and results of operations are included in the Risk Factors section of
Vixel's public filings with the Securities and Exchange Commission, including the
Registration Statement on Form S-1 (File No. 333-81347), that are available at
www.sec.gov.
About Vixel
Vixel Corporation is a leading provider of Storage Area Network (SAN) solutions. The
company's comprehensive product portfolio of switches, hubs and transceivers with an
integrated management software application delivers a reliable, interoperable solution to
its customers and partners. SAN InSite is Vixel's comprehensive management software for
SANs, providing remote control and diagnostics for Fibre Channel switches, hubs and
transceivers from a single console, reducing the administration and overhead of
implementing a SAN. Established in 1991, the company continues to develop innovative
Fibre Channel products to optimize the deployment, performance and management of SAN
solutions. Vixel products are available through its network of value-added resellers,
alliances and OEMs.
For more information, visit Vixel's web site at www.vixel.com. Vixel Corporation is
headquartered at 11911 North Creek Parkway South, Bothell, Washington 98011 and can be
contacted by phone at 425/806-5509 or e-mail at marketing@vixel.com.
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VIXEL CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1999 1998 1999 1998
------- -------- -------- ---------
Revenue:
SAN systems $ 6,602 $ 2,475 $ 17,408 $ 9,032
Components 2,301 5,393 13,554 20,070
------- ------ ------ -------
Total revenue 8,903 7,868 30,962 29,102
Cost of revenue 6,255 6,487 21,928 23,219
------- ------ ------ -------
Gross profit 2,648 1,381 9,034 5,883
------- ------ ------ -------
Operating expenses:
Research and
development 3,340 2,813 9,573 8,062
Acquired in-process
technology -- -- -- 5,118
Selling, general
and administrative 3,660 2,942 10,324 9,179
Amortization and
writedown of goodwill
and intangibles 340 369 1,020 980
Amortization of
deferred compensation 1,271 -- 3,054 --
------- ------ ------ -------
Total operating
expenses 8,611 6,124 23,971 23,339
------- ------ ------ -------
Loss from operations (5,963) (4,743) (14,937) (17,456)
Other (expense)
income, net (564) (158) (1,445) 8,625
------- ------ ------ -------
Net loss $ (6,527) $ (4,901) $(16,382) $ (8,831)
Net loss available
to common stockholders $ (6,576) $ (4,950) $(16,531) $ (8,979)
------- ------ ------ -------
Basic and diluted
net loss per share $ (1.36) $ (1.77) $ (4.18) $ (3.95)
------- ------ ------ -------
Weighted average
shares outstanding $ 4,841 2,795 3,957 2,271
------- ------ ------ -------
Pro forma net
loss available to common
stockholders $ (6,527) $ (4,901) $(16,382) $(8,831)
------- ------ ------ -------
Pro forma basic
and diluted net loss
per share $ (0.37) $ (0.32) $ (0.99) $ (0.60)
------- ------ ------ -------
Pro forma weighted-average
shares outstanding 17,505 15,458 16,620 14,739
------- ------ ------ -------
VIXEL CORPORATION
CONDENSED BALANCE SHEET
(in thousands)
Oct. 3, Jan. 3,
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