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Dot Hill's Alive & Well

SAN vendor hits a profit via OEM relationship with Sun

Dot Hill Systems Corp. (Nasdaq: HILL) today announced solid earnings based on its relationship with Sun Microsystems Inc. (Nasdaq: SUNW). (See Dot Hill Posts Profit.)

The news contrasts with Sun's disappointing storage earnings report earlier this month (see Sun Reduces Q2 Loss), but highlights the opportunity at the low and high ends of the SAN market.

Dot Hill, which makes Fibre Channel SAN systems, announced a profitable fourth quarter that completed a year of turnaround, fueled primarily by its OEM deal with Sun (see Dot Hill: Not Ill Anymore, Dot Hill Becomes Sun Worshipper and Dot Hill Stares at Sun). With Sun accounting for a whopping 84 percent of its fourth-quarter sales, Dot Hill reported income of $6.8 million, or $0.14 per share, after losing $12.4 million, or $0.49 per share, a year ago. It was Dot Hill's third straight profitable quarter after losing in 11 consecutive quarters.

All I can say is, what a difference a year makes,” Dot Hill CEO Jim Lambert said during a call with analysts.

To make the day brighter, Dot Hill said it extended its OEM deal with Sun two more years, through May 2007. Sun has sold Dot Hill’s low-end SAN system as part of a deal signed in May 2002 that gave Sun a minor ownership stake in Dot Hill.

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