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3PAR shows not so sub-par results

Modest improvement

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3PAR has announced modestly improved results beating expectations and set against a still-depressed customer spending environment.

Revenues in its second 2009 quarter were $46.1m, a two per cent year-on-year increase, meaning a $1m improvement, and four per cent higher than the previous quarter. The net loss of $0.76m was down on the previous quarter's $1.8m and 2008's equivalent figure of $1.2m. Another two or three sales and 3PAR might have made a profit.

However, it is being run more efficiently; gross margin increased to 65.9 per cent for example, and as soon as there is an uptick in demand it should be well-positioned to benefit. Aaron Rakers, a Stifel Nicolaus analyst, said that there is concern about 3PAR possibly facing increased competition from EMC's Symmetrix V-Max, IBM's new DS8700 and its XIV array where a refresh is expected in the next few months. No material increase in competitive pressure on its revenues had been seen by 3PAR, though.

The company recognises revenue from a sale only when the system has been fully installed. Customers differ with the time needed to install a system and the period can be between three and five months after the purchase order is received. This means that there isn't a straight relationship in a quarter between purchase orders received and revenue recognised.

Unlike Quantum and Compellent, who have seen improved demand in their general market sectors, 3PAR has seen no improvement in customer spending patterns in its enterprise storage market. Still, it has detected an increase in demand in October which might make its next quarter better.

It's guiding people to expect third quarter revenues of between $45m and $51m, and hoping its new storage efficiency announcements will help it achieve the upper figure. ®

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