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BusinessWire: VA Linux Warns of Wider-Than-Expected Fiscal Loss

Jan 17, 2001, 02:17 (9 Talkback[s])

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BusinessWire -- VA Linux Systems today announced that it expects revenue for the second fiscal quarter, ended January 27, 2001, to be $43 million to $50 million, an increase of 115% to 150% from the second quarter of fiscal 2000. It expects the loss for the quarter, excluding non-cash charges, to be in the range of $0.28 to $0.24 per share. (Editor's note: Wall Street analysts had expected a loss of 14 cents a share.)

"We are in the midst of an overall economic slowdown which is affecting all of our sources of revenue, ranging from Linux servers to Web advertising banner sales," said President and CEO Larry Augustin. "The fiscal second quarter has traditionally been slow for us because of fewer selling days around the holiday season. However, thus far in January we have not seen the acceleration of business we normally see after the holidays. We believe the major contributing factor is the overall economic slowdown. Given the slowdown, we now expect revenue in fiscal 2001 to increase 60% over revenue for the previous year. This is a reduction from the guidance given previously of 125% year-over-year growth."

"Additionally, the current economic conditions are creating a difficult pricing environment resulting in lower gross margins. Going forward in this economic environment, we intend to focus on higher margin business and to manage expense levels such that we can achieve profitability given our revised revenue expectations."

Actual results will be announced on February 20, 2001 after the market closes, followed by a 2:00 P.M. PST conference call.

Full press release

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