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Overland: Bring On NetApp
After taking its lumps in the tape library business, Overland Storage Inc. (Nasdaq: OVRL) is setting its sights on grabbing a share of the disk storage business from Network Appliance Inc. (Nasdaq: NTAP).
Overland lost money last quarter and is losing its biggest OEM partner, so its no surprise it is shifting gears (see Overland Reports Earnings). But pinning its hopes on beating NetApp could prove as risky as staying in the tape business.
The shift is hardly abrupt. Overland has been trying to build its disk business and deemphasize tape for at least two years (see Overland Underperforms and Overland Captures Okapi). Two recent events accelerated the transition: Hewlett-Packard Co. (NYSE: HPQ) dumped Overland as a tape OEM partner two weeks ago, and Overland purchased continuous data protection (CDP) startup Zetta Systems Inc. last week for $9 million (see Overland Loses HP OEM Deal and Overland Overtakes Zetta ).
Today, Overland announced it lost $924,000 or $0.07 per share last quarter on revenue of $55.4 million. Both numbers fell below analysts' expectations of positive $0.06 earnings per share (EPS) and $59 million, according to Reuters. For fiscal year 2005, Overland's profits shrank to $5.9 million, or $0.41 EPS, from $11.8 million, or $0.82 EPS, the previous year.
Considering HP contributes more than half of Overland's revenues, its easy to see why Overland wants to reinvent itself. CEO Chris Calisi envisions Overland providing disk systems for primary and backup storage, and tape for data archiving. Overland is going after the low end and midrange storage market, including iSCSI and NAS.
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