Overland Reports Earnings

SAN DIEGO -- Overland Storage, Inc. (Nasdaq: OVRL - News) today reported results for its fiscal 2008 first quarter ended September 30, 2007.

Net revenue for the fiscal 2008 first quarter was $32.9 million, compared with $41.8 million for the same period a year ago. The company reported a net loss of $4.5 million, or $0.35 per share, for the fiscal 2008 first quarter compared with a net loss of $20.0 million, or $1.54 per share, for the same period a year earlier. The fiscal 2007 first quarter included an $8.4 million charge, or $0.65 per share, related to the impairment of acquired technology.

The company noted that revenue for the fiscal 2008 first quarter decreased 21.3 percent from the prior year quarter primarily due to lower sales to OEM customers. Specifically, sales to the company's largest OEM customer were down 45.4 percent compared with the fiscal first quarter, reflecting the previously announced transition by the customer to a new product from an alternate supplier. This reduction in sales level was largely anticipated. Conversely, the company increased branded revenue 5.1 percent compared to the prior year quarter due to continued strong growth in the areas of warranty and other service revenue. Branded revenue in the first fiscal quarter grew 7.4 percent on a sequential basis compared to the fiscal 2007 fourth quarter, reflecting the expanded products now available as well as increased sales of spares and service.

Gross profit increased 22.2 percent from $5.3 million in the fiscal 2007 first quarter to $6.5 million in the fiscal 2008 first quarter; and gross margin improved from 12.7 percent in the fiscal 2007 first quarter to 19.6 percent in the fiscal 2008 first quarter. The company noted these improvements occurred despite the decline in revenue and resulted principally from the completion of transitioning its manufacturing operations back to San Diego as well as a more favorable product and customer mix.

Overland Storage Inc.