News

posted on 02 March 2008 15:31

Isilon has restated its financial results for FY2006, 1Q, 07 and 2Q, 07, leaving the delayed 3Q, 07 filing as the only outstanding item.

The restatements are preliminary, meaning that they could change, and their effect is to reduce revenue and increae net losses, but not be very much. Sales were being recognised before the money was in Isilon's hands. The new and interim CFO, Bill Richter, who replaced Stu Fuhlendorf back in October, 2007, has been working with Isilon's auditors to clean up the accounts so as to be able to file the held-back 3Q, 07 filing.

From the re-stated results statement the new figures are as follows:-

- For the fourth quarter of 2006, the Company estimates that restated revenues will be $19.6 million compared to previously reported revenues of $20.7 million and that net loss per share will increase to $0.75 from $0.72.
- For fiscal 2006, restated revenues are expected to be $61.2 million compared to previously reported revenues of $62.3 million. Net loss per share for fiscal 2006 is expected to be $3.09 per share compared to the previously reported $3.02 per share.
- For the first quarter of 2007, the Company estimates that restated revenues will be $17.8 million, compared to previously reported revenues of $21.6 million, and that net loss will increase to $0.11 per share compared to the previously reported $0.06 per share.
- For the second quarter of 2007, the Company estimates that restated revenues will be $22.9 million, compared to previously reported revenues of $25.1 million and that net loss will increase to $0.08 per share compared to the previously reported $0.06 per share.

(CEO and co-founder Sujal Patel pictured above.)

This restatement will not enhance the reputation of ex-CFO Stu Fuhlendorf, nor of ex-CEO Steve Goldman.

Considering that Isilon went public after an over-subscribed IPO in December 2006 and three disappointing quarters led up to the CEO and CFO change in October, 2007, this been been a miserable performance.

The preliminary 3Q, 07 results showed revenue growth but an inability to match costs to growth and an inablity to make revenue expectations. The total revenue was expected to be $23.2 million to $23.7 million, 6 to 8 percent down from the previous quarter and 30 - 33 percent up from the year ago quarter. The revenue expectation, set by Isilon, for 3Q, 07 was $25 million to $27.5 million.

If the 3Q, 07 figures are, as expected, down on these preliminary figures because of over-enthusiastic sales revenue recognition than that would make a year of underwhelming performance. The company needs to formalise Bill Richter as CFO or appoint a proper one, and it needs to show Wall Street that it can be trusted. It also needs to get its sales force working, capitalise on the growth prospects and make a profit.

That will be down to emergency CEO and co-founder Sujal Patel or to a new CEO, possibly the ex-ADIC CEO, Peter Van Oppen, very recently appointed to Isilon's board.