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Isilon Comes up for Air: Page 3 of 4

To correct these problems, Isilon adjusted $7 million of the $67.4 million of revenue previously recorded from the fourth quarter of 2006 through the second quarter of 2007.

With so much uncertainty surrounding the company, Patel admitted that the audit affected sales. “It had an impact on our ability on our ability to close sales in Q4,” he said. “I believe that the impact was most pronounced with new customers.”

The exec nonetheless struck an upbeat note during last night’s call, explaining that he has restructured the company’s sales team and services organization, in addition to strengthening the company’s internal controls around revenue recognition.

“I continue to believe in Isilon’s long-term capabilities and long-term ability to capture a significant part of the storage market,” he said, adding that the vendor plans to increase its headcount from 321 people this year.

Although unwilling to divulge Isilon’s product roadmap, Patel promised significant R&D investment on the vendor’s recently announced X-Series clustered storage system .