Most storage companies have suffered severely from the downturn in
information technology spending, which began about a year ago. But Storage Computer Corp. (AMEX: SOS) has taken this agony to the extreme. The Nashua, N.H., developer of
disk arrays is in the midst of its fourth straight year of dramatic revenue
declines.
Storage Computer held a conference call Thursday to soothe the nerves of
anxious investors and discuss second-quarter operating results and a recent
round of financing, both of which the company reported earlier this month.
They also reviewed product developments and marketing issues.
Officials blamed a second-quarter revenue shortfall on a large product
backlog for a single customer, which was finally delivered on Aug. 15 and
will be booked as revenue for the third quarter. But the sale didnt appear
to make a big improvement in the companys cash position. Despite a $5
million sale of convertible stock earlier this month, officials said the
company now has only $10 million cash. Based on the current cash burn rate
of about $2.5 million per quarter, they expect to have enough money to
operate until the middle of next year without the need for additional
financing.
Chief operating officer John Thonet is pinning his hopes on some new
product introductions later this year. In September, the company plans to
introduce a network attached storage product with failover capabilities and
the ability to address multiple networks. He also expects to deliver a
database product in the fourth quarter to Crimson Media, an online video
acquisition portal. The Crimson deal is worth an initial $1.35 million, and
the total value of the contract may exceed $2 million, according to the
companies.
Thonet said Storage Computer is now turning to very high-end VARs [value
added resellers] and systems integrators to go after the enterprise world.
The company is using some of these specialists to penetrate specific
industries like medical imaging and media pre-press and graphics
operations.
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