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Exhibit 99.1
EDITORIAL CONTACTS: INVESTOR RELATIONS CONTACT:
Kellie DiNaro Rosie Sundell
Gadzoox Networks Gadzoox Networks
408-361-6229 408-360-6011
[email protected] [email protected]
Elisabeth Monaghan
The Hoffman Agency
720-904-3790
[email protected]
GADZOOX NETWORKS REPORTS SECOND QUARTER
FISCAL 2001 EARNINGS
Company repositions for success with new executive team, a revamped
infrastructure and solid products and technology
SAN JOSE, CALIF.--(PR NEWSWIRE)--Oct. 23, 2000--Gadzoox Networks, Inc.
(Nasdaq:ZOOX) a provider of SAN (storage area network) products, today
reported financial results for its second quarter of fiscal 2001.
The Company reported net revenues of $7.2 million for the second fiscal
quarter ended September 30, 2000, compared with net revenues of $9.0
million for the quarter ended June 30, 2000. The Company reported a net
loss of $23.9, or $0.86 per share for the second fiscal quarter of 2001,
compared to a net loss of $14.2 million, or $0.52 per share for its
first fiscal quarter of 2001. The results were in line with the
Company's September announcement of anticipated revenue and earnings.
As previously reported, revenues in the September quarter of fiscal 2001
were lower due to slower than anticipated sales of the Company's
Capellix line of SAN switch products . Additionally a one-time charge
against earnings of $9.1 million was taken to account for production
cancellation penalties as well as excess inventory manufactured on the
basis of initially higher sales forecasts.
"We are transitioning the Company, and the second quarter results
clearly reflect that," said Gadzoox Networks' President and CEO Michael
Parides. "What the results don't reflect is the progress we're making
towards a more focused approach to products, strategic direction and how
the company will function operationally."
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Second Quarter Developments
The Company's second fiscal quarter 2001 was marked by a number of
positive developments, including:
- The creation of a new executive management team, starting with the
appointment of Michael Parides as President and CEO. Others include the
addition of Clark Foy (Vice President of Marketing), Ron von Trapp (Vice
President of Sales) and several additions at the director level.
- The launch of the Capellix 2000 fibre channel switch that brought a new,
entry-level price point for SANs which the company believes will
significantly expand the adoption of SANs.
- The adoption of Capellix switches by Compaq Computer Corporation into
its product line and by Microsoft as part of its reference systems for
testing multi-node clustering for Windows 2000.
- Significantly improved sell-through in the distribution channel, with a
35 percent increase over the first fiscal quarter of 2001. Channel
inventory in the quarter was reduced overall by 47 percent as a result
of a combination of sell-through and product returns.
"We've made substantial progress in repositioning ourselves for
success," Parides said. "We're very excited at the upside potential of
this company, and the foundation we now have in place to execute
consistently."
ABOUT GADZOOX NETWORKS
Gadzoox Networks, Inc. (NASDAQ: ZOOX) provides networking solutions for
enterprise storage with scalable, managed SAN solutions based on
Gadzoox' Fibre Channel switches, routers, storage pooling, hubs and
management products. Serving as modular building blocks, Gadzoox'
products are designed to address the growth in enterprise data through
the evolving capabilities of SANs. Gadzoox is an ISO 9001 certified
company. Gadzoox corporate headquarters is located at 5850 Hellyer Ave.,
San Jose, Calif., 95138. For more information, visit the company's web
site at www.gadzoox.com or call 888.423.3222.
The statements in this news release relating to future events or
predictions such as those relating to the rate of adoption of SAN's and
the Company's future prospects, involve known and unknown risks and
uncertainties which may cause Gadzoox' actual results in future periods
to be materially different from any performance suggested in this
release. Such factors include, but may not necessarily be limited to,
fluctuations in customer demand, both in timing and in volume, the fact
that the SAN market is new and evolving, the Company's dependence on a
limited number of products, a significant portion of which are sold to a
limited number of partners including OEM and distribution channel
partners, the ability or willingness of our partners to sell our
products, market acceptance of new products, in
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particular the Capellix line of products, and the timing of such
acceptance, the Company's dependence on its contract manufacturer,
competition in the Company's industry and the timing of new technology.
In the context of forward looking information provided in this news
release, reference is made to the discussion of risk factors detailed in
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000, as well as subsequent filings.
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GADZOOX NETWORKS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net revenues $ 7,219 $ 11,081 $ 16,221 $ 20,292
Cost of revenues 13,616 6,325 18,839 11,740
-------- -------- -------- --------
Gross margin (6,397) 4,756 (2,618) 8,552
-------- -------- -------- --------
Operating expenses:
Research and development 8,641 4,540 14,160 8,458
Sales and marketing 5,989 1,914 11,715 3,802
General and administrative 2,344 866 3,829 1,629
In-process research & development -- -- 4,900 --
Amortization of goodwill & intangible assets 1,048 -- 2,096 --
Amortization of deferred compensation 169 321 337 643
-------- -------- -------- --------
Total operating expenses 18,191 7,641 37,037 14,532
-------- -------- -------- --------
Loss from operations (24,588) (2,885) (39,655) (5,980)
Total other income, net 710 936 1,595 795
-------- -------- -------- --------
Net Loss $(23,878) $ (1,949) $(38,060) $ (5,185)
======== ======== ======== ========
Basic net loss per share $ (0.86) $ (0.09) $ (1.38) $ (0.39)
======== ======== ======== ========
Weighted average shares used in computing
basic net loss per share 27,782 21,199 27,608 13,455
======== ======== ======== ========
Pro forma basic net loss per share $ (0.86) $ (0.08) $ (1.38) $ (0.24)
======== ======== ======== ========
Weighted average shares used in computing
pro forma basic net loss per share 27,782 24,222 27,608 21,891
======== ======== ======== ========
</TABLE>
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GADZOOX NETWORKS, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
September 30,
2000
-------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,775
Short-term investments 30,695
Accounts receivable, net 7,225
Inventories 9,034
Prepaid expenses and other current assets 2,933
---------
Total current assets 60,662
Property and equipment, net 7,551
Goodwill 18,869
Other assets 1,517
---------
$ 88,598
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable $ 33
Current portion of capital lease obligations 1,257
Accounts payable 6,202
Compensation related accruals 1,625
Other accrued liabilities 4,569
---------
Total current liabilities 13,686
Capital lease obligations, net of current portion 767
---------
Total liabilities 14,453
---------
Stockholders' equity:
Common stock 139
Additional paid-in capital 152,300
Deferred compensation (780)
Accumulated deficit (77,514)
---------
Total stockholders' equity 74,145
---------
$ 88,598
=========
</TABLE>
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Note to Editors: Gadzoox and the Gadzoox logo are registered trademark of
Gadzoox Networks, Inc. Bitstrip, Denali, Gibraltar, Ventana, SANtools and
Capellix are trademarks of Gadzoox Networks, Inc. All other trademarks are
property of their respective owners.
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