Sbe (NASDAQ:SBEI)
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SBE, Inc. (Nasdaq:SBEI), a leading provider of
high-performance Internet Protocol (IP) based storage and networking
solutions for original equipment manufacturers (OEMs), today reported
results for the three months ended January 31, 2006.
Net sales for the first quarter ended January 31, 2006 were $1.4
million, compared to net sales of $2.8 million in the same quarter of
fiscal 2005. Net sales for the first quarter of fiscal 2005 included
$1.0 million attributable to sales to the Hewlett Packard Company. Net
loss for the first quarter of fiscal 2006 was $2.7 million, or $0.28
per share basic and diluted, compared to net income for the same
period of fiscal 2005 of $177,000, or $0.03 per share basic and
diluted. The loss for the quarter ended January 31, 2006 includes $1.5
million of non-cash expenses primarily related to the amortization of
software acquired from PyX Technologies, stock based compensation paid
to consultants, and employee stock option expense pursuant to the
Company's required adoption of Statement of Financial Accounting
Standards No. 123R, Share-Based Payments, at the beginning of this
fiscal year.
The Company's cash balance was $2.8 million and $3.6 million at
January 31, 2006 and October 31, 2005, respectively, and no long-term
debt existed at either date.
"During the quarter just ended, we proactively implemented cash
conservation initiatives to reduce our future cash expenses,"
commented David Brunton, Chief Financial Officer of SBE. "Employees
agreed to reduce their base salaries by 30% in exchange for a
prescribed number of shares of the Company's common stock, and our
Board of Directors is now compensated 100% in stock. This new
compensation plan, coupled with a reduction in non-critical cash
expenditures, is expected to result in a $550,000 reduction in
quarterly cash expenses."
Significant Milestones
-- Design Wins for iSCSI Software Solutions. Over the past couple
of months, storage equipment providers Genstor Systems,
Silicon Mechanics, Open Source Storage (OSS) and Yang Ming
International (YMI) have chosen to license and integrate SBE's
PyX iSCSI target software into their Internet Protocol (IP)
based storage area network (SAN) systems.
-- Distribution Channel Expansion. SBE is moving forward in 2006
with a broadened channel of leading manufacturer's
representatives and distributors that now provide extended
coverage throughout key regions of North America, Europe and
Asia. The most recent additions include Centaur, FourFront,
PSI Solutions, ION Systems, and Spectro Associates.
-- European Value-Added Distributor Ships iSCSI-Ready Servers.
Option+ has started to ship all of its servers with SBE's PyX
iSCSI software ready for easy and convenient activation and
deployment.
"We've been seeing iSCSI market adoption growing but at a
relatively modest pace. Our steady progress encourages us to continue
pursuing OEMs directly and through our channels," said Dan Grey,
President and Chief Executive Officer of SBE. "We were disappointed
with this quarter's embedded products revenues. Recognizing the market
risks and challenges facing us, we implemented a cash conservation
program that better positions the company to weather market
fluctuations while simultaneously investing for future growth."
Business Outlook
"Based on our current visibility into bookings and market
conditions, we expect our embedded products revenues to improve in the
second quarter. We expect to continue to build on the momentum that
our iSCSI software has generated to date by continuing to expand our
distribution reach and closing new business with storage OEMs that
need to differentiate and enhance their solutions with iSCSI
functionality," said Grey. "On the VoIP side, our team will remain
focused on completing development and release of our DSP products as
well as identifying and penetrating the voice, video and multimedia
application markets with our advanced DSP and VoIP solutions."
Conference Call Information
The company's first quarter conference call will be held Thursday,
March 2, 2006 at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To
access the call, please dial 800-875-9124 and enter code number
5202633 or go to www.sbei.com approximately 10 minutes prior to the
start of the call.
A replay of the company's first quarter conference call will be
available for 48 hours. To access the replay, please dial 800-642-1687
and enter code number 5202633. The replay can also be accessed
following the conference call via the company's web site at
www.sbei.com.
About SBE
SBE designs and provides IP-based networking solutions for an
extensive range of applied computing applications. SBE delivers a
portfolio of scalable, standards-based hardware and software products,
including iSCSI and VoIP, designed to enable optimal performance and
rapid deployment across a wide range of next-generation communications
and storage systems. Based in San Ramon, California, SBE is a publicly
traded company (Nasdaq:SBEI) with products sold worldwide through
direct sales, OEMs and system integration partners. More information
is available at www.sbei.com.
Forward-Looking Statements
This news release contains certain forward-looking statements that
involve risks and uncertainties, including statements about market
opportunity for new products and the demand for services that may be
offered by SBE's customers. Such statements are only predictions and
the company's actual results may differ materially from those
anticipated in these forward-looking statements. Factors that may
cause such differences include, but are not limited to, risks related
to the company's reliance on a small number of OEM customers, rapidly
changing product requirements, the introduction of new products,
market acceptance of the company's products, and reliance on strategic
partners. These factors and others are more fully discussed in the
documents the company files from time to time with the Securities and
Exchange Commission, particularly, the company's most recent Form 10-K
and Form 10-Q.
SBE and the SBE logo are registered trademarks of SBE, Inc. All
other brand or product names are trademarks or registered trademarks
of their respective holders.
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SBE, INC.
CONDENSED STATEMENTS OF OPERATIONS
for the three months ended January 31, 2006 and 2005
(In thousands, except per share amounts)
(Unaudited)
Three months ended
January 31,
2006 2005
---------- ----------
Net sales $ 1,400 $ 2,815
Cost of sales 1,825(1) 1,230
---------- ----------
Gross profit (loss) (425) 1,585
Product research and development 946 473
Sales and marketing 598 559
General and administrative 771 369
---------- ----------
Total operating expenses 2,315(2) 1,401
---------- ----------
Operating income (loss) (2,740) 184
Interest and other income 18 (2)
---------- ----------
Income (loss) before income taxes (2,722) 182
Provision for income taxes 5 5
---------- ----------
Net income (loss) $ (2,727) $ 177
========== ==========
Basic earnings (loss) per share $ (0.28) $ 0.03
========== ==========
Diluted earnings (loss) per share $ (0.28) $ 0.03
========== ==========
Basic -- shares used
in per share computations 9,895 5,136
========== ==========
Diluted -- shares used
in per share computations 9,895 5,869
========== ==========
(1) Includes $1.0 million of non-cash expense related to
amortization of PyX software.
(2) Includes $445,000 of non-cash expense related to stock based
compensation.
SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
January 31, October 31,
2006 2005
---------- ----------
Current assets:
Cash and cash equivalents $ 2,764 $ 3,632
Trade accounts receivable, net 1,059 1,555
Inventories 1,633 1,283
Other 240 293
---------- ----------
Total current assets 5,696 6,763
Property, plant and equipment, net 648 563
Capitalized software costs, net 10,422 11,424
Other 53 82
---------- ----------
Total assets $ 16,819 $ 18,832
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 933 $ 743
Accrued payroll and employee benefits 116 155
Other accrued expenses 397 345
---------- ----------
Total current liabilities 1,446 1,243
---------- ----------
Other long-term liabilities 322 241
---------- ----------
Total liabilities 1,768 1,484
---------- ----------
Stockholders' equity:
Common stock 33,460 35,431
Deferred compensation - (2,401)
Accumulated deficit (18,409) (15,682)
---------- ----------
Total stockholders' equity 15,051 17,348
---------- ----------
Total liabilities and stockholders'
equity $ 16,819 $ 18,832
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