Xyratex Annouces Q2 Results

HAVANT, U.K. -- Xyratex Ltd (Nasdaq: XRTX), a leading provider of enterprise class data storage subsystems and storage process technology, today announced results for the second fiscal quarter ended May 31, 2007. Revenues for the second quarter were $213.0 million, a decrease of 26.3% compared to revenues of $288.9 million for the same period last year.

For the second quarter, GAAP net income was $2.0 million, or $0.07 per diluted share, compared to GAAP net income of $24.6 million, or $0.83 per diluted share, in the same period last year. Non-GAAP net income decreased 80% to $5.1 million, or a diluted earnings per share of $0.17, compared to non-GAAP net income of $25.5 million, or $0.86 per diluted share, in the same quarter a year ago (1).

Gross profit margin in the second quarter was 17%, compared to 21.5% in the same period last year, primarily due to business mix.

Revenues from sales of our Networked Storage Solutions products were $169.2 million as compared to $153.7 million in the same quarter a year ago, an increase of 10%. Gross profit margin in the Networked Storage Solutions business was 14.4% as compared to 13.3% a year ago. Revenues from sales of our Storage Infrastructure products were $43.9 million as compared to $135.1 million in the same quarter a year ago, a decrease of 67.5%. Gross profit margin in the Storage Infrastructure business was 28% as compared to 30.9% a year ago.

Our second quarter results were in-line with our expectations, and reflect the period of significantly reduced spending from our largest Storage Infrastructure customer as it continues to integrate capital equipment acquired as a result of its recent acquisition. We did a good job of executing to our strategic plans and customer expectations. I am encouraged with regard to our continued progress in expanding our customer base as well as our efforts in accessing new markets for our capital equipment,” said Steve Barber, CEO of Xyratex. “Despite some challenging customer requirements, I am confident that the fundamentals of the markets we serve continue to remain good and believe we continue to improve on our competitive and technology position.”Xyratex Ltd.