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July 2, 2013

Xyratex Q2 revenue down 33%

Xyratex, a provider of data storage systems, said it will shut down its core business unit in California after it reported a drop in second quarter profits.

By Amy-Jo Crowley

The UK-based company said quarterly profits for the period ending May 31, 2013, plummeted to $2.9m (£1.9m) from $7m last year, as sales fell 33% to $216.2m.

Xyratex, the product portfolio of which includes test equipment used in disk drive assembly and integration, put the fall down to revenue declines from its major business units.

CEO Ernie Sampias said he would replace the businesses with original equipment manufacturing:

"The gradual revenue decline from our previously largest customer NetApp will cease after 2014 and this revenue is being replaced with new OEM business wins," he explained.

"With our new ClusterStor product line, which addresses the HPC/Big Data marketplace, we have achieved incremental design wins, added a number of new customers in just the last 3 months and are on course to meet our revenue target of $60m in fiscal 2013."

The company, which saw its CEO, Steve Barber, step down last April, said it expects revenue in the third quarter to lie between $195 million and $225 million and will pay a dividend of $0.075 per share, unchanged from last year.

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