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January 27, 1998

AUSPEX BLAMES DISK INVENTORY, JAPAN FOR Q2 LOSSES

By CBR Staff Writer

Network file server vendor Auspex Systems Inc says that inventory problems and continuing weak sales in Asia affected its second quarter earnings but admits that the new products needed to help its recovery are running three months late. Auspex reported net losses of $7.6m, a net loss of $0.30 a share, down from profits of $4.9m last time, on revenues down 11.5% at $43.4m. Its mid term losses stand at $5.8m from a profit of $9.2m last time (CI No 3,333). Santa Clara, California-based Auspex had a major re- shuffle at its Japanese office last year (CI No 3,274), but sales haven’t yet picked up there, the company said. But the major problem during the quarter was an excess of storage inventory. Auspex stocked up on 4Gb drives in anticipation of bigger demand, only to find disk drive prices plunging and users making a faster than anticipated transition to 9.5Gb drives. These charges contributed approximately $0.24 to the overall loss. This year is a transitional year for Auspex as it moves from Unix-based products over to two new products a bilingual Unix and NT-capable server, now due out in around two months time, and its first native Windows NT version, due 90 days after that. Japan in particular, previously a very strong market for Auspex, is not likely to recover until these new systems arrive, due to the fast take-up of NT in Japan. Auspex is also at pains to make clear that it doesn’t regard its bilingual servers as a short-lived point product. The gradual transition from Unix to NT will take up to ten years, said a spokesperson. Although the company now thinks its shift over to the new products is going to take longer than expected it says it still hopes to see an acceleration in top line growth and much better financial performace in FY 1999. Chief financial officer Kent Robinson retired at the beginning of the month, the same day that Auspex warned its figures would be down. In the shorter term, Auspex says that on February 9th its plans to launch products relating to disaster recovery and protection of business-critical data.

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