Storage Soup

Apr 6 2009   4:02PM GMT

Isilon cuts staff, switches sales VPs

Dave Raffo Dave Raffo Profile: Dave Raffo

Isilon Systems finally took Wall Street’s advice about slashing staff today, revealing it would reduce its worldwide workforce by approximately 10%.

Isilon had 394 employees at the end of 2008. The clustered NAS vendor is also changing its chief of sales, brining in NetApp and Quantum veteran George Bennett to replace Steve Fitz as SVP of worldwide field operations.

Financial analysts have called on Isilon to cut staff since founder Sujal Patel took over as CEO in September of 2007. The company hasn’t had a profitable quarter since going public in 2006.

Patel gave up his resistance to the cuts, and estimated the reduction will cost $850,000 this quarter and then save the company $4 million annually.

“It’s clear that persistent global economic weakness and uncertainty has led to contraction in many of our customers’ IT budgets,” Patel said in a press release today announcing the restructuring.

Isilon actually met sales expectations despite suffering wider losses than expected, according to the preliminary results it disclosed today. Isilon expects revenue in the range of $26.5 million to $27 million, up approximately 10% to 12% from the same period last year and down approximately 15% to 17% from the fourth quarter of 2008. Although Isilon did not give a previous forecast for the quarter, financial analysts expected around $26.9 million in revenue and a loss of 12 cents per share. Isilon said it expects to lose 14 cents to 15 cents per share.

The company also took an inventory writedown of around $3.8 million because of the softening economy for its older products in anticipation of customers moving to its new products launched last month.

“That means there was faster adoption of new product, but they were unable to get rid of the old solution, so that’s a mixed bag,” Enterprise Strategy Group analyst Brian Babineau said.

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