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» VIEW ALL POSTS Jul 15 2009   12:46PM GMT

3PAR blames poor sales on tight budgets



Posted by: Dave Raffo
Tags:
storage vendors; disk arrays

If 3PAR’s results are an indication, storage spending failed to show any signs of a rebound last quarter.

3Par Tuesday afternoon said its revenue for last quarter was below its previous forecast, and down from the previous quarter. The storage systems vendor disclosed that it expects to report revenue in the range of $44.2 million to $44.5 million, compared to its previous guidance of $48 million to $50 million. Its revised forecast is around an 8% to 9% drop from the previous quarter and a 3% to 4% increase from last year. 3PAR also expects to report a net loss for the quarter.

3PAR reported that “sluggishness” in spending grew worse later in the quarter, which suggests budgets aren’t loosening up yet.

“The weakness was more widespread than what we saw last quarter when it was mostly Internet companies. It was more broad-based this quarter,” 3PAR CEO Dave Scott said in a conference call with analysts. “There are clear signs of budget restraints that remain in place.”

Along with tight budgets, Scott blamed the poor results on delays of customer installations of large systems previously ordered (3PAR recognizes revenue when systems are installed instead of upon taking orders). He said there was some “pricing pressure” (discounts) from competitors but said 3PAR was not losing business to rivals. He said 3PAR ran into EMC’s new V-Max system “far less than we expected to” and told an analyst on the call that talk of the New York Stock Exchange replacing 3PAR with Compellent is not true.

“The New York Stock Exchange remains a good customer, and I am unaware of the replacement of any business at New York Stock Exchange by Compellent,” he said.

Scott added, “We are clearly disappointed by our execution this quarter, and we have every intention of improving our performance in the future.”

Not much in the immediate future, though. 3PAR also lowered its guidance for the current quarter too, dropping its revenue estimate to $43 million to $47 million – below financial analysts’ $50.8 million consensus estimate.

We’ll get a better idea of whether 3PAR’s results last quarter were typical of the industry over the next few months when larger vendors report their earnings.

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