Short Takes - Financial Watch:

Dot Hill Expects Revenue Growth In Q2, 2002

Dot Hill Systems Corp., confirmed previous guidance that it expects sequential revenue growth for the second quarter 2002. It also estimates second quarter 2002 revenue to be between $11.0 and $11.2 million with a net loss per share between $0.32 and $0.38 inclusive of the following adjustments:

1. A non-cash charge of $3.6 million related to a warrant granted to Sun Microsystems in association with the OEM Agreement signed May 24, 2002.
2. A non-cash increase to inventory reserves of $2.5 million related to excess SANnet inventory given the continued slowness of the economy and planned product migration.
3. An income tax benefit of $3.3 million related to tax refunds made available by recent tax law changes. The company received $950,000 of this benefit during the second quarter 2002 and $2.3 million in 2001.

Excluding these items, the net loss per share would be between $0.22 and $0.28, compared to a net loss of $0.24 per share for the first quarter of 2002.

Further, net cash as of the end of June 2002 was $6.9 million as compared to the end of March 2002 of $11.4 million.

"In light of our current backlog of approximately $10.9 million, we expect to achieve sequential revenue growth for the remainder of this year and next year," said Preston Romm, Dot Hill's chief financial officer. "Looking ahead, we are projecting 2002 revenues to be in the range of $40 to $50 million and 2003 revenues in the range of $125 to $175 million. Further, we are anticipating the 2002 net loss per share to be between $0.85 and $1.10. Excluding the adjustments for the items discussed above, we would project the net loss per share for 2002 to be between $0.75 and $1.00. Earnings per share for 2003 are expected to be in the range of $0.15 to $0.20. A return to profitability is expected by the second quarter of 2003."

"We have never been more excited about the company's prospects for the future. During the second quarter, we signed major OEM deals and announced an agreement with Solectron, which will manufacture Dot Hill's new products developed under the OpenAxis Intelligence initiative," said Jim Lambert, Dot Hill's chief executive officer. "Our OEM revenues for the past year have accounted for almost half our revenue. We will continue to focus on the indirect sales channels that fit well with our product set and manufacturing strategy."

Dot Hill is a leading independent provider of storage networking solutions. Its SANnet product line includes storage area networks, MIL-STD-810F and NEBS Level 3 certified systems.

The Axis Storage Manager family of products enables companies to enhance their existing IT infrastructures without replacing them regardless of what storage is used. Axis also provides mirroring, remote replication and disaster recovery options for mission- critical applications. Dot Hill's customers include many of the world's leading Internet service providers, telecommunications companies, and government agencies.

Dot Hill's second quarter financial results conference call will be held July 24 at 12:00 p.m. ET. A live audio Webcast can be heard at their Web site in the investor relations section at www.dothill.com.

If you prefer to join via telephone, please dial 888-609-4128 at least 5 minutes prior to the start of the call. International participants should dial 706-679-3529.

A replay of the call will be available on the web, beginning at 3:00 p.m. ET on July 24 and run through 5:00 p.m. ET on July 31, by dialing 800-642-1687. If calling internationally, dial 706-645-9291. Use reservation number 4840381.

Dot Hill is an ISO 9002 certified company.

IBM's Soon-To-Be Sold Unit Lost $515M In Last Five Quarters

International Business Machines Corp., said that for the past five quarters it booked an after-tax loss of $515 million from its discontinued hard disk drive operations.

The added disclosure came in a regulatory filing a week ahead of the company's second-quarter earnings announcement, when it had planned to release the information for the year-earlier period, and at a time when investors are examining all financial statements closely.

According to the filing, IBM's hard-disk drive operations subtracted $92 million from net income in the first quarter of 2002 and $423 million for the four quarters of 2001.

IBM said in June that it would sell its hard drive operations for $2.05B to Japan's biggest electronics maker Hitachi, which will combine them with its own in a joint venture that Hitachi will fully own in three years.

Hitachi will initially own 70 percent of the joint venture.

The sale of the unit requires IBM under Generally Accepted Accounting Principles to reclassify previous quarterly income as either income from continuing operations, or income from discontinued operations, which are in this case the hard disk drive operations.

IBM stock was down $1.63 to $69.67 and shares fell 2.3 percent in New York Stock Exchange.

Rasvia Opens New Corporate Headquarters In Silicon Valley

Rasvia Systems, Inc., a provider of high-performance, turnkey network storage hardware and software solutions, announced the opening of its global corporate headquarters in Sunnyvale, CA., to expand engineering, marketing and business development opportunities. Rasvia is currently developing a new class of standards-based, midrange SAN (storage area network) systems to meet enterprise customers' massive data capacity requirements.

The new facility will support Rasvia's aggressive growth plans over the next several years, which includes the development of an extensive engineering and testing lab that will drive network storage innovation with emerging technologies such as 10GB Fibre Channel, sATA (Serial Advanced Technology Attachment) and InfiniBand. Rasvia's new headquarters measures approximately 27,000 square feet and has space for 100 employees.

"As we continue to expand our engineering, marketing and sales efforts, this new facility will be essential to our ability to develop and bring to market high performance network storage solutions, as well as attract and retain top professionals," said Peter Shambora, president and CEO of Rasvia Systems.

The company's new corporate headquarters are located at 640 West California Avenue in Sunnyvale, near Mathilda Avenue off Highway 101. Rasvia also has engineering facilities in Taipei, Taiwan.

About Rasvia Systems

Rasvia Systems develops network storage hardware and software that provides branded computer system manufacturers with high- performance turnkey solutions to meet expanding market demands. Unlike other storage companies, Rasvia's unique business model leverages ODMs (Original Design Manufacturers) to provide its customers with a zero capital outlay and rapid time-to-volume production process.

Rasvia's powerful software architecture is the foundation for a new class of standards-based, midrange SAN (storage area network) systems that will offer enterprise-class, advanced data services to meet today's massive information capacity requirements. Founded in March 2001, Rasvia Systems Inc., is a privately held company with headquarters in Sunnyvale, CA., and additional engineering facilities in Taiwan.

For more information, please call 408-636-5738 or visit the Web site at: www.rasvia.com.