EXHIBIT 99.1
Contact: David W. Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
SBE, Inc. Reports Fourth Quarter and Fiscal 2005 Results
SAN RAMON, CA, December 14, 2005 - SBE, Inc. (Nasdaq: SBEI), a leading provider
of high-performance Internet Protocol (IP) based networking solutions for next
generation storage and communications original equipment manufacturers (OEMs),
today reported results for the three months and fiscal year ended October 31,
2005.
Net sales for the fiscal year ended October 31, 2005 were $8.1 million,
including $1.0 million attributable to sales to Hewlett-Packard (HP), compared
to net sales of $11.1 million in fiscal 2004, including $4.9 million
attributable to sales to HP. Net sales for the fourth quarter of fiscal 2005
were $1.8 million. None of the company's net sales in the fourth quarter of
fiscal 2005 was attributable to sales to HP. Net sales for the corresponding
quarter in fiscal 2004 were $2.2 million, including $0.8 million attributable to
sales to HP.
Net loss for fiscal 2005 amounted to $4.2 million, or $0.66 per share basic and
diluted, compared to a net loss for fiscal 2004 of $1.7 million, or $0.33 per
share basic and diluted. The loss for the year ended October 31, 2005 and 2004
include $1.2 million and $1.8 million, respectively, of non-cash expenses for
the amortization of intellectual property, stock options and inventory valuation
charges for obsolete and slow-moving products.
Net loss for the fourth quarter of 2005 amounted to $2.5 million, or $0.26 per
share basic and diluted, compared to a net loss for the fourth quarter of 2004
of $2.3 million, or $0.46 per share basic and diluted. The loss for the fourth
quarters ended October 31, 2005 and 2004 include $1.2 million and $1.5 million,
respectively, of non-cash expenses for the amortization of intellectual
property, stock options and inventory valuation charges for obsolete and
slow-moving products. These non-cash charges were included in cost of goods
sold.
The company's cash balance was $3.6 million and $1.8 million at October 31, 2005
and 2004, respectively, and no long-term debt existed at either date.
"The expenses and subsequent net losses recorded for fiscal 2005 were expected
as part of our strategy to fully leverage the PyX acquisition and effectively
drive our iSCSI (Internet Small Computer System Interface) initiatives,"
commented David Brunton, Chief Financial Officer of SBE. "During the last two
quarters, we invested aggressively in R&D, technical support, and
sales/marketing to further bolster the technical advantages and feature sets of
our iSCSI products as well as expand our reach into new markets and applications
worldwide. We anticipate that incurring critical investment expenditures in the
short-term will position the company to yield healthier returns for our
shareholders in the long-term."
Significant Milestones in Fiscal 2005
o Acquisition of PyX Technologies. Through its acquisition of PyX, the
company acquired iSCSI transport software solutions developed for
enterprise storage suppliers seeking reliable, robust solutions for
their customer base. Merging PyX's iSCSI software with the company's
traditional embedded communications hardware provides the company
with the necessary hardware technology and software data transport
to create unique and high-performance, IP-based storage blades for
use by the company's traditional telecommunications customers.
o Design Wins for iSCSI Software Solutions. LSI Logic selected the PyX
iSCSI software for integration into its intelligent iMegaRAID(R)
family of iSCSI RAID solutions, and ONStor Inc., a leading
Enterprise NAS gateway provider, licensed the PyX iSCSI product for
use with its enterprise-level Bobcat Series of Network Attached
Storage (NAS) Gateways. The PyX iSCSI software products have been
integrated into solutions serving a variety of applications,
including security surveillance, storage virtualization, remote
storage and NAS.
o Expansion of Embedded Product Portfolio. During the year, the
company launched two high-density Digital Signal Processor (DSP)
modules based on leading-edge devices from Texas Instruments. These
modules are designed to serve a broad spectrum of Voice over
Internet Protocol (VoIP) and video-based applications. In June 2005,
the company introduced an intelligent, PowerPC-based processor board
that can be used to create a VoIP or video gateway blade when
bundled with the company's DSP and wide area networking (WAN)
modules. Additional product developments include quad Gigabit
Ethernet based on the emerging AdvancedMC form factor.
"I'm pleased with the progress that we've made thus far in positioning our team
to penetrate the growing IP market with iSCSI and VoIP solutions," said Dan
Grey, President and Chief Executive Officer of SBE. "Although last quarter's
revenues weren't as strong as we anticipated, the wheels are clearly in motion,
and we are continuing to see more evidence of gaining traction in the
marketplace, particularly with our iSCSI solutions. Last week, we announced
several new design wins, including YMI and Open Source Storage. These wins
resulted directly from broadening our distribution channel to include
established manufacturer's representative firms, like Fourfront, Centaur and
PSI. Given the strong sales activity and numerous product evaluations in which
we're currently engaged with storage OEMs, we expect to close several more iSCSI
deals in the first half of 2006."
Business Outlook
"As we head into fiscal 2006, we expect our Storage group to build on the
momentum that our iSCSI software has generated to date by continuing to expand
our distribution reach and closing new business with storage OEMs that need to
differentiate and enhance their solutions with iSCSI functionality," said Grey.
"On the Embedded side, our team will remain focused on completing development
and release of our DSP products and penetrating the voice, video and multimedia
application markets with our advanced DSP and VoIP solutions."
"To further capitalize on the SBE acquisition of PyX, we expect to leverage the
technology and products from both the Storage and Embedded groups to develop
innovative hardware and software solutions, much like the HighWire SAS
iBlade(TM) storage product that we announced a couple of weeks ago.
High-performance, cost-effective IP-based storage blades can uniquely address
the requirements of our traditional telecommunications customers," concluded
Grey.
Conference Call Information
The company's year-end and fourth quarter conference call will be held Thursday,
December 15, 2005 at 11:00am Eastern Time / 8:00am Pacific Time. To access the
call, please dial (800) 875-9124 and enter code number 2990705 or go to
www.sbei.com approximately 10 minutes prior to the start of the call.
A replay of the company's fourth quarter conference call will be available for
48 hours. To access the replay, please dial (800) 642-1687 and enter code number
2990705. The replay can also be accessed following the conference call via the
company's web site at www.sbei.com.
About SBE
SBE designs and provides IP-based networking solutions for an extensive range of
applied computing applications. SBE delivers a portfolio of scalable,
standards-based hardware and software products, including iSCSI and VoIP,
designed to enable optimal performance and rapid deployment across a wide range
of next-generation communications and storage systems. Based in San Ramon,
California, SBE is a publicly traded company (NASDAQ: SBEI) with products sold
worldwide through direct sales, OEMs and system integration partners. More
information is available at www.sbei.com.
Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks
and uncertainties, including statements about market opportunity for new
products and the demand for services that may be offered by SBE's customers.
Such statements are only predictions and the company's actual results may differ
materially from those anticipated in these forward-looking statements. Factors
that may cause such differences include, but are not limited to, risks related
to the company's reliance on a small number of OEM customers, rapidly changing
product requirements, the introduction of new products, market acceptance of the
company's products, and reliance on strategic partners. These factors and others
are more fully discussed in the documents the company files from time to time
with the Securities and Exchange Commission, particularly, the company's most
recent Form 10-K and Form 10-Q.
SBE and the SBE logo are registered trademarks of SBE, Inc. All other brand or
product names are trademarks or registered trademarks of their respective
holders.
- Tables Follow -
SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and years ended October 31, 2005 and 2004
(In thousands, except per share amounts)
Three months ended Fiscal years ended
October 31, October 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
(unaudited)
---------------------------------------------------------------
Net sales $ 1,815 $ 2,220 $ 8,056 $ 11,066
Cost of sales 2,027 2,545 5,404 6,646
------------ ------------ ------------ ------------
Gross profit (loss) (212) (325) 2,652 4,420
Operating expenses:
Product research and development 1,022 815 2,694 2,411
Sales and marketing 647 585 2,293 2,177
General and administrative 665 615 1,906 1,755
Loan benefit -- -- -- (239)
------------ ------------ ------------ ------------
Total operating expenses 2,334 2,015 6,893 6,104
------------ ------------ ------------ ------------
Operating loss (2,546) (2,340) (4,241) (1,684)
Interest income 27 1 22 5
Other expense (6) -- (6) --
------------ ------------ ------------ ------------
Loss before income taxes (2,525) (2,339) (4,225) (1,679)
Provision for income taxes -- -- (5) --
------------ ------------ ------------ ------------
Net loss $ (2,525) $ (2,339) $ (4,230) $ (1,679)
============ ============ ============ ============
Net loss per common share:
Basic $ (0.26) $ (0.46) $ (0.66) $ (0.33)
Diluted $ (0.26) $ (0.46) $ (0.66) $ (0.33)
============ ============ ============ ============
Shares used in per share calculation:
============ ============ ============ ============
Basic 9,879 5,087 6,439 5,022
Diluted 9,879 5,087 6,439 5,022
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SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, October 31,
2005 2004
------------ ------------
Current assets:
Cash and cash equivalents $ 3,632 $ 1,849
Trade accounts receivable, net 1,555 1,668
Inventories 1,283 1,926
Other 293 227
------------ ------------
Total current assets 6,763 5,670
Property, plant and equipment, net 563 427
Capitalized software costs, net 225 48
Intellectual property, net 11,199 --
Other 82 28
------------ ------------
Total assets $ 18,832 $ 6,173
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 743 $ 856
Accrued payroll and employee benefits 155 391
Other accrued expenses 345 484
------------ ------------
Total current liabilities 1,243 1,731
------------ ------------
Other long-term liabilities 241 139
------------ ------------
Total liabilities 1,484 1,870
------------ ------------
Stockholders' equity:
Common stock 35,431 15,755
Deferred compensation (2,402) --
Accumulated deficit (15,681) (11,452)
------------ ------------
Total stockholders' equity 17,348 4,303
------------ ------------
Total liabilities and stockholders' equity $ 18,832 $ 6,173
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