Overland Underperforms

Overland Storage Inc. (Nasdaq: OVRL) today said it will miss its guidance for the second straight quarter, as it tries to rely less on revenue from a struggling tape market and more on disk-based backup systems.

Overland revised its guidance to revenues of approximately $58 million, down from $62 million it forecast in February. The company expects earnings per share (EPS) of $0.13 instead of its previous guidance of $0.17 to $0.19. In the same quarter last year, Overland recorded $58.8 million in revenue and $0.22 EPS.

Overland slashed its guidance three times over the last four quarters, and laid off around 140 employees, or one third of its work force, last September (see Overland to Layoff One Third).

Overlands announcement comes after tape library vendor Storage Technology Corp. (StorageTek) (NYSE: STK) announced disappointing results for last quarter (see Storage Spending Slips and StorageTek Revenue Falls Short ). Like other tape library vendors Advanced Digital Information Corp. (Nasdaq: ADIC) and Quantum Corp. (NYSE: DSS), StorageTek and Overland have aggressively pushed into disk-based backup as tape sales have slowed (see Overland Marks a Year of Disk).

Sadly, the rate of disk sales, while up, isn't keeping pace with tape library shrinkage. While Overland shipped its 1,000th REO disk appliance last month, REO sales make up only around 5 percent of the company's revenues (see Overland Ships 1,000th Disk and Tape Vendors Grab Disk).