SBE, Inc. Reports First Quarter 2006 Results
March 01 2006 - 8:00AM
Business Wire
SBE, Inc. (Nasdaq:SBEI), a leading provider of high-performance
Internet Protocol (IP) based storage and networking solutions for
original equipment manufacturers (OEMs), today reported results for
the three months ended January 31, 2006. Net sales for the first
quarter ended January 31, 2006 were $1.4 million, compared to net
sales of $2.8 million in the same quarter of fiscal 2005. Net sales
for the first quarter of fiscal 2005 included $1.0 million
attributable to sales to the Hewlett Packard Company. Net loss for
the first quarter of fiscal 2006 was $2.7 million, or $0.28 per
share basic and diluted, compared to net income for the same period
of fiscal 2005 of $177,000, or $0.03 per share basic and diluted.
The loss for the quarter ended January 31, 2006 includes $1.5
million of non-cash expenses primarily related to the amortization
of software acquired from PyX Technologies, stock based
compensation paid to consultants, and employee stock option expense
pursuant to the Company's required adoption of Statement of
Financial Accounting Standards No. 123R, Share-Based Payments, at
the beginning of this fiscal year. The Company's cash balance was
$2.8 million and $3.6 million at January 31, 2006 and October 31,
2005, respectively, and no long-term debt existed at either date.
"During the quarter just ended, we proactively implemented cash
conservation initiatives to reduce our future cash expenses,"
commented David Brunton, Chief Financial Officer of SBE. "Employees
agreed to reduce their base salaries by 30% in exchange for a
prescribed number of shares of the Company's common stock, and our
Board of Directors is now compensated 100% in stock. This new
compensation plan, coupled with a reduction in non-critical cash
expenditures, is expected to result in a $550,000 reduction in
quarterly cash expenses." Significant Milestones -- Design Wins for
iSCSI Software Solutions. Over the past couple of months, storage
equipment providers Genstor Systems, Silicon Mechanics, Open Source
Storage (OSS) and Yang Ming International (YMI) have chosen to
license and integrate SBE's PyX iSCSI target software into their
Internet Protocol (IP) based storage area network (SAN) systems. --
Distribution Channel Expansion. SBE is moving forward in 2006 with
a broadened channel of leading manufacturer's representatives and
distributors that now provide extended coverage throughout key
regions of North America, Europe and Asia. The most recent
additions include Centaur, FourFront, PSI Solutions, ION Systems,
and Spectro Associates. -- European Value-Added Distributor Ships
iSCSI-Ready Servers. Option+ has started to ship all of its servers
with SBE's PyX iSCSI software ready for easy and convenient
activation and deployment. "We've been seeing iSCSI market adoption
growing but at a relatively modest pace. Our steady progress
encourages us to continue pursuing OEMs directly and through our
channels," said Dan Grey, President and Chief Executive Officer of
SBE. "We were disappointed with this quarter's embedded products
revenues. Recognizing the market risks and challenges facing us, we
implemented a cash conservation program that better positions the
company to weather market fluctuations while simultaneously
investing for future growth." Business Outlook "Based on our
current visibility into bookings and market conditions, we expect
our embedded products revenues to improve in the second quarter. We
expect to continue to build on the momentum that our iSCSI software
has generated to date by continuing to expand our distribution
reach and closing new business with storage OEMs that need to
differentiate and enhance their solutions with iSCSI
functionality," said Grey. "On the VoIP side, our team will remain
focused on completing development and release of our DSP products
as well as identifying and penetrating the voice, video and
multimedia application markets with our advanced DSP and VoIP
solutions." Conference Call Information The company's first quarter
conference call will be held Thursday, March 2, 2006 at 11:00 a.m.
Eastern Time / 8:00 a.m. Pacific Time. To access the call, please
dial 800-875-9124 and enter code number 5202633 or go to
www.sbei.com approximately 10 minutes prior to the start of the
call. A replay of the company's first quarter conference call will
be available for 48 hours. To access the replay, please dial
800-642-1687 and enter code number 5202633. The replay can also be
accessed following the conference call via the company's web site
at www.sbei.com. About SBE SBE designs and provides IP-based
networking solutions for an extensive range of applied computing
applications. SBE delivers a portfolio of scalable, standards-based
hardware and software products, including iSCSI and VoIP, designed
to enable optimal performance and rapid deployment across a wide
range of next-generation communications and storage systems. Based
in San Ramon, California, SBE is a publicly traded company
(Nasdaq:SBEI) with products sold worldwide through direct sales,
OEMs and system integration partners. More information is available
at www.sbei.com. Forward-Looking Statements This news release
contains certain forward-looking statements that involve risks and
uncertainties, including statements about market opportunity for
new products and the demand for services that may be offered by
SBE's customers. Such statements are only predictions and the
company's actual results may differ materially from those
anticipated in these forward-looking statements. Factors that may
cause such differences include, but are not limited to, risks
related to the company's reliance on a small number of OEM
customers, rapidly changing product requirements, the introduction
of new products, market acceptance of the company's products, and
reliance on strategic partners. These factors and others are more
fully discussed in the documents the company files from time to
time with the Securities and Exchange Commission, particularly, the
company's most recent Form 10-K and Form 10-Q. SBE and the SBE logo
are registered trademarks of SBE, Inc. All other brand or product
names are trademarks or registered trademarks of their respective
holders. -0- *T SBE, INC. CONDENSED STATEMENTS OF OPERATIONS for
the three months ended January 31, 2006 and 2005 (In thousands,
except per share amounts) (Unaudited) Three months ended January
31, 2006 2005 ---------- ---------- Net sales $ 1,400 $ 2,815 Cost
of sales 1,825(1) 1,230 ---------- ---------- Gross profit (loss)
(425) 1,585 Product research and development 946 473 Sales and
marketing 598 559 General and administrative 771 369 ----------
---------- Total operating expenses 2,315(2) 1,401 ----------
---------- Operating income (loss) (2,740) 184 Interest and other
income 18 (2) ---------- ---------- Income (loss) before income
taxes (2,722) 182 Provision for income taxes 5 5 ----------
---------- Net income (loss) $ (2,727) $ 177 ========== ==========
Basic earnings (loss) per share $ (0.28) $ 0.03 ==========
========== Diluted earnings (loss) per share $ (0.28) $ 0.03
========== ========== Basic -- shares used in per share
computations 9,895 5,136 ========== ========== Diluted -- shares
used in per share computations 9,895 5,869 ========== ==========
(1) Includes $1.0 million of non-cash expense related to
amortization of PyX software. (2) Includes $445,000 of non-cash
expense related to stock based compensation. SBE, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) January 31, October 31,
2006 2005 ---------- ---------- Current assets: Cash and cash
equivalents $ 2,764 $ 3,632 Trade accounts receivable, net 1,059
1,555 Inventories 1,633 1,283 Other 240 293 ---------- ----------
Total current assets 5,696 6,763 Property, plant and equipment, net
648 563 Capitalized software costs, net 10,422 11,424 Other 53 82
---------- ---------- Total assets $ 16,819 $ 18,832 ==========
========== LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Trade accounts payable $ 933 $ 743 Accrued payroll and
employee benefits 116 155 Other accrued expenses 397 345 ----------
---------- Total current liabilities 1,446 1,243 ----------
---------- Other long-term liabilities 322 241 ----------
---------- Total liabilities 1,768 1,484 ---------- ----------
Stockholders' equity: Common stock 33,460 35,431 Deferred
compensation - (2,401) Accumulated deficit (18,409) (15,682)
---------- ---------- Total stockholders' equity 15,051 17,348
---------- ---------- Total liabilities and stockholders' equity $
16,819 $ 18,832 ========== ========== *T
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