Dot Hill Q4 2007

Dot Hill (symbol: HILL) will be releasing its Q4 2007 results and holding its analyst conference on March 16, 2008. You can look at past analyst conference summaries now and then at the March conference summary when it is posted at my Dot Hill main page.

In the meantime management has twice updated their guidance on Q4 results, so we have a pretty good idea what the main numbers will be (they are way better than guidance given in November). Revenue was near $51.5 million, and loss per share will be between $0.11 and $0.14. In Q4 2006 revenues were $59.4 million?

Is that anything to get excited about? This price per share hit a low of $2.12 in December; today it ended at $3.98 per share.

To the extent their is excitement, it is due to the long-term story line for Dot Hill. A few years back it was almost totally dependent on selling its data storage products for SANs to Sun. With Sun in a slump, it was not pretty. But the company had a lot of cash on its balance sheets. It went into cost-reduction mode and started looking for a more diversified customer base. But Sun bought a storage company and started using the acquired technology more and Hill's less. Dot Hill's growth in new customer orders was slower than its decline in Sun orders.

In Q3 2007 Dot Hill reported that 42% of revenue was now from non-Sun customers. Since then it has been announced that HP plans to use Dot Hill products more intensely. More new customers have signed up. And most of the new customers are just beginning to sell Hill products.

Hill had $90.2 million in cash at the end of Q3. We know Q4 sales bounced upwards. If sales go well in 2008 and costs are kept low, $4 a share will be conservative. On the other hand the data storage device arena is very competitive, so at any price Hill is a risk stock.

Disclaimer: keep in mind that I own Dot Hill stock.

Keep diversified.

www.dothill.com
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