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Dot Hill Picks Up Chaparral

In a bid to improve its technological edge and expand its market reach, Dot Hill Systems Corp. (Nasdaq: HILL) has spent $62 million in cash and taken on about $10.4 million in liabilities to acquire Chaparral Network Storage Inc. (see Dot Hill Acquires Chapparal).

Dot Hill, headquartered in Carlsbad, Calif., will make Chaparral's Longmont, Colo., facility the Dot Hill Controller Technology Center, retaining about 50 engineers working there. By early 2005, Dot Hill hopes to integrate Chaparral's SAN controller technology into its line of SAN and NAS systems.

One thing: Chaparral's CEO since 2001, Victor Perez, won't be staying on board, but plans to retire.

Chaparral's controller was a selling point for Dot Hill, which now has a controller supply agreement with Infortrend Technology Inc. Indeed, Dot Hill execs admit trying to acquire Infortrend, to no avail, before sealing the Chaparral deal.

"Owning our own controller technology will allow us to fully control our own destiny," said Dot Hill CEO Jim Lambert on a call with financial analysts today. Chaparral, which also makes SAN systems and storage routers, has about 19 patents and patents pending on its controller. In contrast, Dot Hill has fewer than ten.

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