SBE, Inc. Announces Second Quarter 2006 Results
May 25 2006 - 4:30PM
Business Wire
SBE, Inc. (Nasdaq:SBEI), a leading provider of high-performance IP
storage solutions serving remote back-up and disaster recovery
applications, today reported results for the three-month and
six-month periods ended April 30, 2006. Net sales for the second
quarter ended April 30, 2006 were $1.8 million, compared with $1.7
million for the second quarter of fiscal 2005. Net loss for the
second quarter of fiscal 2006 was $3.0 million, or $0.30 per share,
basic and diluted, compared to a net loss for the second quarter of
fiscal 2005 of $936,000, or $0.18 per share, basic and diluted. The
loss for the quarter ended April 30, 2006 includes: -- $1.0 million
of non-cash expenses primarily related to the amortization of
software acquired from PyX Technologies; -- $636,000 resulting from
the write-off of capitalized development and inventory related to
the discontinuance of SBE's VoIP/DSP product line; -- $330,000 of
stock-based compensation expense resulting from stock grants paid
by the company; and -- $350,000 of stock-based compensation expense
resulting from the company's required adoption of Statement of
Financial Accounting Standards No. 123 (revised 2004), "Share-Based
Payments," ("SFAS 123R") at the beginning of the year. Net sales
for the six months ended April 30, 2006 were $3.2 million, compared
with $4.5 million for the same period in 2005. Net loss was $5.8
million, or $0.58 per share, basic and diluted, for the six months
ended April 30, 2006 compared to a net loss of $760,000, or $0.15
per share, basic and diluted, for the same period in 2005. The loss
for the six months ended April 30, 2006 includes: -- $2.0 million
of non-cash expenses primarily related to the amortization of
software acquired from PyX Technologies and; -- $636,000 resulting
from the write-off of capitalized development and inventory related
to the discontinuance of SBE's VoIP/DSP product line; -- $402,000
of stock-based compensation expense resulting from stock grants
paid by the company; and -- $707,000 of stock-based compensation
expense resulting from the company's required adoption of SFAS 123R
at the beginning of the year. SBE ended the second quarter of
fiscal 2006 with working capital (current assets less current
liabilities) of $3.2 million, compared to $5.5 million at the end
of fiscal 2005. No debt existed at either date. Quarterly
Highlights -- iSCSI Shipments. SBE activated over 400 iSCSI Target
Software licenses in the second quarter of fiscal 2006, resulting
from OEM design wins achieved during the past year. -- Continued
iSCSI Evaluation and Design-In Activity. SBE saw continued interest
from storage OEMs and system integrators to activate iSCSI software
evaluations. During the second quarter, six storage equipment
providers licensed SBE's iSCSI target software for integration into
their next generation solutions. -- iSCSI Feature Enhancements. In
March, SBE released its 2.0 version of the iSCSI Target Software
which included upgraded features such as software RAID
functionality, explicit FileIO configuration, selectable ERL
settings per initiator, and updated GUI design to further enhance
the user experience. -- Storage Industry Veteran Joins Board. John
D'Errico, former Executive Vice President of LSI Logic's Storage
Component Business, was appointed to SBE's Board of Directors in
April. Mr. D'Errico brings to SBE over 30 years of storage and
communications expertise. "SBE continues to see an increasing flow
of interest in customer evaluations of our iSCSI products," said
Greg Yamamoto, President and Chief Executive Officer of SBE. "We
remain focused on enhancing and expanding our portfolio of IP
storage solutions designed to enable highly reliable remote
storage, back-up, and disaster recovery for small-to-medium
business and large enterprises." "In our efforts to better leverage
the iSCSI traction we have seen to date, we are placing a greater
level of emphasis on product development and support for the IP
storage market. As a result, we have decided to discontinue
development of our VoIP/DSP product line so that resources from
those efforts can be redirected to accelerate iSCSI-related
initiatives," continued Yamamoto. "Although our future development
activity is focused primarily on IP storage solutions, we will
continue to fully support our existing embedded customers with the
same level of premium products and services to which they are
accustomed." Conference Call Information SBE will not host a second
quarter conference call. About SBE SBE designs and provides
IP-based storage networking solutions for an extensive range of
business critical applications, including back-up and disaster
recovery. SBE delivers a portfolio of scalable, standards-based
hardware and software products designed to enable optimal
performance and rapid deployment across a wide range of
next-generation 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. 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. CONSOLIDATED STATEMENTS OF OPERATIONS for
the three and six months ended April 30, 2006 and 2005 (In
thousands, except per share amounts) (Unaudited) Three months ended
Six months ended April 30, April 30, 2006 2005 2006 2005 ---------
-------- -------- ------- Net sales $ 1,816 $ 1,706 $ 3,216 $4,520
Amortization of acquired software 1,023 5 2,046 20 Cost of sales
1,277 1,071 2,079 2,285 --------- -------- -------- ------- Gross
profit (484) 630 (909) 2,215 Product research and development 1,120
573 2,050 1,046 Sales and marketing 610 567 1,170 1,126 General and
administrative 477 426 945 795 Stock-based compensation 350 --- 707
--- --------- -------- -------- ------- Total operating expenses
2,557 1,566 4,872 2,967 Operating loss (3,041) (936) (5,781) (752)
Interest and other income (expense) 12 --- 30 (3) ---------
-------- -------- ------- Loss before income taxes (3,029) (936)
(5,751) (755) Income tax provision --- --- 6 5 --------- --------
-------- ------- Net loss $ (3,029) $ (936) $(5,757) $ (760)
========= ======== ======== ======= Basic and diluted loss per
share $ (0.30) $ (0.18) $ (0.58) $(0.15) ========= ========
======== ======= Basic and diluted -- shares used in per share
computations 10,123 5,207 10,008 5,172 ========= ======== ========
======= SBE, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited) April 30, October 31, 2006 2005 ---------- -----------
Current assets: Cash and cash equivalents $ 1,643 $ 3,632 Trade
accounts receivable, net 1,586 1,555 Inventories 1,188 1,283 Other
248 293 ---------- ----------- Total current assets 4,665 6,763
Property, plant and equipment, net 610 563 Capitalized software
costs, net 9,163 11,425 Other 53 82 ---------- ----------- Total
assets $ 14,491 $ 18,833 ========== =========== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $
917 $ 743 Deferred revenue 211 138 Other accrued expenses 344 362
---------- ----------- Total current liabilities 1,472 1,243 Other
long-term liabilities 300 241 ---------- ----------- Total
liabilities 1,772 1,484 ---------- ----------- Stockholders'
equity: Common stock 34,157 35,432 Deferred compensation 0 (2,402)
Accumulated deficit (21,438) (15,681) ---------- ----------- Total
stockholders' equity 12,719 17,349 ---------- ----------- Total
liabilities and stockholders' equity $ 14,491 $ 18,833 ==========
=========== *T
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