Feeds

Has Compellent caught a cold?

Second quarter of depressed earnings likely

Intelligent flash storage arrays

Compellent is ending seventeen quarters of revenue growth with an expected $4.3m to $4.8m sequential revenue decrease for its first 2010 quarter.

CEO Phil Soran has issued reduced guidance for the quarter, saying revenues are expected to be between $31.5m and $32m, significantly lower than the forecast $35m to $37m.

Last quarter Compellent reported another quarter of revenue growth but missed its earnings forecast, something Wall Street disliked a lot. The shares plunged from the January 2010 high of $24.40 to a low of $15.40 in February, a 37 per cent fall. They then recovered to the $17 - $18 range but have just been pummelled again, dropping to $13.30 on the revenue guidance news.

What is going on here? With a $3.5m to $6.5m revenue shortfall it is painfully obvious that net income is going to be severely affected. In fact, considering that net income last quarter was $1.3m, and that was lower than forecast, then it may well be that Compellent will report a loss of $3m, and this when the USA is climbing out of a recession, NetApp reporting booming revenues and Nexsan having an IPO. Why are things looking like the recession never ended in Compellent's markets?

CEO Phil Soran said: "This sequential decrease in revenue is mainly due to seasonality that had more of an impact on the Company this quarter than it has previously, changes made to optimise our sales organization, and delays in larger revenue orders."

Reverse the sales organisation changes at once sir, this is optimisation Wall St. will not like.

Compellent has gained 130 new customers this quarter, more than the 98 in the first 2008 quarter. Its quarterly revenues are up on the year-ago quarter's $28.1m, out of which it made a $1m profit. Its gross margin is up. Its cash and investments are up. Its deferred revenues are up. Forbes magazine has just lauded Compellent as its third fastest growing US technology company, pipping 3PAR by one spot.

Everything is rosy, just dandy, blooming marvellous, but for one thing: existing customers held back on large purchases and an anticipated slowing down of revenue growth in the transition from 2009 to 2010 didn't happen as it had in previous years but turned into a revenue decrease. Oops, major oops in fact.

One obvious conclusion is that sales forecasting needs tightening up. Another could be that Compellent's technology advantages are being eroded and need shoring up. Competitors such as EMC are adding automated data movement across storage tiers to their disk arrays and thus lessening the gap between themselves and Compellent. Wall St. will be looking for Compellent to extract sales organisation and technology rabbits from its hat next quarter and get back on an earnings and revenue growth track. ®

Intelligent flash storage arrays

More from The Register

next story
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
The DRUGSTORES DON'T WORK, CVS makes IT WORSE ... for Apple Pay
Goog Wallet apparently also spurned in NFC lockdown
Cray-cray Met Office spaffs £97m on VERY AVERAGE HPC box
Only 250th most powerful in the world? Bring back Michael Fish
Microsoft brings the CLOUD that GOES ON FOREVER
Sky's the limit with unrestricted space in the cloud
'ANYTHING BUT STABLE' Netflix suffers BIG Europe-wide outage
Friday night LIVE? Nope. The only thing streaming are tears down my face
IBM, backing away from hardware? NEVER!
Don't be so sure, so-surers
Google roolz! Nest buys Revolv, KILLS new sales of home hub
Take my temperature, I'm feeling a little bit dizzy
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
New hybrid storage solutions
Tackling data challenges through emerging hybrid storage solutions that enable optimum database performance whilst managing costs and increasingly large data stores.
Getting ahead of the compliance curve
Learn about new services that make it easy to discover and manage certificates across the enterprise and how to get ahead of the compliance curve.