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No green shoots for 3PAR

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Installation delays and lowered demand have depressed 3PAR's quarterly results, and it sees no green shoots of recovery looking ahead.

For its first fiscal 2010 quarter, ended June 30, it expects to report revenues of $44.2m - $44.5m. This is an increase of just 3-4 per cent year-on-year but an 8-9 per cent decline compared to the previous quarter, in which revenues were 37 per cent up year-on-year. Growth is slowing down substantially.

The original guidance for the quarter was $48m - $50m. Delays in customer installations pushed revenue recognition into the current quarter and there was generally weaker demand in the quarter. A concentration of sales on large orders didn't help either.

As a result 3PAR expects to report a loss of $1.84m - $2.45m for the quarter (based on its earnings per share numbers).

3PAR also made a loss in its previous quarter, of $907,000, which closed is fiscal 2009 year. That year showed a loss of $959,000.

There is no immediate light at the end of the recession tunnel as, for its next quarter, 3PAR hopes to see revenues of $43m - $47m, which would compare to the year-ago quarter's $45.1m.

President and CEO David Scott said 3PAR was disappointed with its sequential revenue decrease. Talking of the demand decline pattern, Scott said: "This phenomena increased in intensity towards the end of our first quarter, similar to the turbulence we experienced at the end of our fiscal 2009 third quarter, as there was a renewed reluctance amongst prospective and existing customers to commit to major capital expenditures.”

It seems as if 3PAR is experiencing a double dip in demand from its enterprise customers.

It has reduced its guidance for full fiscal 2010 revenues to $190m - $205m, compared to fiscal 2009's $184.7m, with likely profit in the range of $0.0 - $6.15m (based on EPS numbers). The previous 2010 guidance was for $205m - $210m. 3PAR has also said it is unlikely to sustain a 40 - 45 per cent CAGR between its IPO in November, 2007, and the end of its 2011 financial year.

Losses and lowered forecasts show that, for 3PAR, the recession is continuing and showing no signs of improvement at all. ®

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