Overland Storage Reports Brisk Storage Sales

Overland Storage reported record revenue and earnings for its second fiscal quarter of 2004--and has the channel to thank for it.

Revenue for the quarter was $67.8 million, up 39 percent from the $48.6 million reported for the same quarter last year. Income more than doubled to $3.4 million, or 24 cents per share, compared to $1.5 million a year ago.

Christopher Calisi, president and CEO, said that while the storage market in general is doing well, the company's sales of branded storage products, including tape automation and backup appliance systems, did exceptionally well.

Calisi said 67 percent of Overland's revenue came from OEM sales compared to 33 percent from solution providers. However, the OEM portion of sales was unusually high for the quarter because of surprisingly strong business from HP, the company's largest single customer, he said.

Solution provider sales were $21 million for the quarter, up 34 percent over the same period last year and up 12 percent on a quarter-to-quarter basis, Calisi said. The company has no direct sales. "A lot of resellers are switching to lead with Overland Storage," he said. "This is due to their comfort level with our quality and reliability. Also, we are the only leading vendor to focus on the channel."Overland's main product focus in the past quarter was on its REO series of iSCSI-based data backup appliances, which according to Calisi makes the company the world's biggest supplier of iSCSI-based storage, and on its new NEO 8000 tape library.

The NEO 8000, which just started shipping, is Overland's first library with room for up to 500 tape cartridges. "It was really designed for the channel," Calisi said. "In the past, we stopped at 240 cartridges, forcing resellers to work with competitors' products for larger libraries. We are entering this quarter with a backlog."

Overland is planning to unveil a technology bundling agreement with a major backup software vendor in the near future for the company's REO appliance. Calisi said the agreement is unusual in that the software vendor is bundling Overland's hardware instead of the usual hardware vendor bundling software scenario, he said. Calisi did not say who the software vendor was. "They've seen the acceleration gains with our appliance," he said. "It's nice to have them coming to us for this."

Calisi raised guidance for the second half of fiscal year 2004, projecting revenue of $250 million and income of 83 cents per share.