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Technology Stocks : Network Engines, Inc. (NENG) -- Ignore unavailable to you. Want to Upgrade?

To: thomas a. burke who wrote (26)	12/29/2000 7:52:51 AM
From: Glenn Petersen	Respond to of 49

Old news at this point: Network Engines, Inc. Expects Lower First Quarter Revenue CANTON, Mass.--(BUSINESS WIRE)--Dec. 20, 2000--Network Engines (Nasdaq: NENG) today announced that the Company expects results for the fiscal quarter ending December 31, 2000 to be below analysts' expectations of approximately $19.5 million, primarily due to an industry-wide slowing in IT Internet infrastructure investments and an increase in the consolidation and shakeout of "new economy" businesses. Revenue for the first quarter is currently expected to be between $7 million and $10 million. "As we said during our conference call in November, we expected license revenue to decline and that future Company revenues would be predominantly product-based. As a result of the reported softness in the economy, with a particular weakness in the high-tech sector, we are analyzing our models for the balance of fiscal 2001," said Lawrence Genovesi, chairman and CEO of Network Engines, Inc. Mr. Genovesi commented, "In light of the current activity level, every aspect of the business is being scrutinized and appropriate strategies will be implemented to maximize sales. We anticipate reporting first quarter results the week of January 22, 2001 and will provide guidance for FY 2001 at that time." Genovesi further stated, "With our new network attached storage product, StorageEngine Voyager, and the upcoming announcement of our next generation, high performance WebEngine platform, we expect to maintain our strong position in the server appliance market. With our excellent cash position, we believe we have the resources necessary to continue our growth. Nevertheless, we will be revising our spending models for the next year to reflect these changes in our overall business and the economy." About Network Engines Network Engines (Nasdaq: NENG) provides high-density, scalable Internet server appliances that support large Web-based applications for web hosting and service providers, content infrastructure providers, application service providers and larger enterprises. The company was founded in 1997 and is based in Canton, Massachusetts. For more information, visit the company's Web site at www.networkengines.com. Some of the information in this release may contain statements regarding future expectations, plans, prospects or performance of the Company that constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Network Engines cannot guarantee future results, levels of activity, performance or achievements. The numbers discussed in this press release also involve risks and uncertainties. The following factors, among others, could cause actual results to differ materially from those described by such statements: general market conditions, increased competition and technological changes in the markets in which Network Engines competes, quarterly fluctuations in operating results attributable to the timing and amount of orders for the Company's products and services, the timing and success of product development and new product introductions, market acceptance of the Company's products and services, customer concentration, the Company's ability to keep pace with changing product requirements and factors affecting the demand for storage, networking, and appliance solutions, dependence on a single contract manufacturer, component shortages, and those other factors contained in the section titled "Risk Factors" as outlined in the Company's Quarterly Report on Form 10Q for the period ending June 30, 2000, those outlined beginning on page 5 of the Company's Registration Statement on Form S-1 (File No. 333-34286) declared effective by the Securities and Exchange Commission on July 12, 2000, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. The forward-looking statements and numbers contained herein represent the judgment of Network Engines, as of the date of this release, and Network Engines disclaims any intent or obligation to update such forward-looking statements to reflect any change in Network Engines expectations with regard thereto or any change in events, conditions, circumstances on which such statements are based. Network Engines and the Network Engines logo are trademarks of Network Engines, Inc. All other trademarks are the property of their respective holders. CONTACT: Network Engines, Inc. (Investor Relations) Nancy A. Miller, 781-332-1229 nancy.miller@networkengines.com KEYWORD: MASSACHUSETTS

To: thomas a. burke who wrote (26)	2/28/2001 8:25:35 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 49

NENG was sitting on $3.24 in cash per share at December 31, 2000 and is now introducing its second generation product: news.cnet.com Network Engines revs hopes on new Sierra server By Stephen Shankland Staff Writer, CNET News.com February 27, 2001, 6:05 p.m. PT Times are tough for Network Engines, a maker of super-thin servers, but the company is banking on a new model to spur a recovery. Network Engines, which pioneered the now-hot market of two-processor servers just 1.75 inches thick, is introducing on Wednesday its second-generation product, the WebEngine Sierra. The product comes with advanced cooling and management features that CEO Larry Genovesi asserts will put Network Engines ahead of competitors. And the company, whose products are used chiefly to deliver Web pages and handle other Internet tasks, could use some help. For one, sales have slowed. Customers have been delaying orders amid the economic slowdown, Genovesi said. The Canton, Mass.-based company had to write off $15 million worth of servers that it was unable to sell in the last quarter of 2000, partly because customers were awaiting the new Sierra machine, the company said in a Securities and Exchange Commission filing. Worse, an expected recovery in the second half of 2001 doesn't look likely, Genovesi said. Perhaps most serious, Network Engines faces competition from major server companies with thin, rack-mountable servers. IBM and VA Linux Systems, which sold Network Engines' servers under their own labels, now have comparable products of their own. Hewlett-Packard, Dell Computer and Compaq Computer all have their own products as well. "2000 was the year of the rack. Everyone jumped in at some point," IDC analyst John Humphreys said. "It's going to remain competitive." The stock has been hit by these changes. In Network Engines' initial public offering in July, the company raised $117 million with the stock selling at $17. In the months afterward, it rose as high as $48.50 but has sunk to $1.81 as of Tuesday's market close. Genovesi acknowledged that letting IBM and others use his company's technology caused problems. "We taught them how to do 1U servers," he said, referring to the 1.75-inch thickness used when measuring servers bolted into racks by the dozen. Network Engines is also suffering from its competitors' tolerance for low-profit margins, he added. "Some of them are hell-bent on destroying the margins in the server business," he said. "They're destroying the ability for the entire market to innovate." Although Compaq has resisted price cuts, IBM and Dell have not, Genovesi said. A deep price cut by IBM last week forced Network Engines to revise the pricing for the new Sierra at the last minute. But the company has high hopes for Sierra, which Network Engines said has big improvements for those stacking up servers in data centers. The new system is designed to match the company's marketing shift from early adopters buying the latest thing to more conservative corporate clients. The Sierra features a novel "heat pipe" that transfers heat from the chips to cooling fins. Because each fin is cooled by three fans, the failure of one fan won't cripple the system. The cooling system allows the use of two Pentium III CPUs running at 1GHz, said marketing director Rick Friedman. It is also designed to accommodate faster Pentiums of the current generation and upcoming Intel models code-named Tualatin, he said. "I think Network Engines has done a really good job of identifying the needs of the data center, in particular the need to remove heat from the rack-dense server," IDC's Humphreys said. The heat pipe technology is "unique," he added. Another Sierra feature is the "CM bus," a system that lets administrators control the servers remotely. With it, administrators can restart servers, monitor their performance, and even wipe the hard disk and reinstall software. And using supporting chips from ServerWorks, Sierra has two 64-bit, 66MHz PCI slots--the fastest speeds available. Pricing for WebEngine Sierra begins at $3,495 for a single 800MHz Intel Pentium III processor, 9GB hard drive and 128MB RAM; and goes up to $6,735 for dual Pentuim III 1GHz processors, two 18GB hard drives and 1GB RAM. The features are good, but getting the attention of big businesses could be tough for the smaller Network Engines, Humphreys said. The corporate customer is "risk-averse. It needs to be convinced why it's going to move away from the traditional server vendors."