The net revenue figures for the second quarter of 2007 were within, and net loss per share beat guidance provided by the company in May 2007.

Gross margin for the second quarter of 2007 was 12.3 percent as compared to second quarter 2006 gross margin of 20.8 percent and first quarter 2007 gross margin of 12.5 percent. The quarter-to-quarter gross margin performance is consistent with guidance set on the company's earnings call in May 2007 where it noted that gross margin for the first quarter of 2007 had exceeded expectations and predicted that gross margin percentage for the second quarter of 2007 would be flat or decline slightly as a result of anticipated product mix.

"The company exited the second quarter of 2007 with cash and cash equivalents totaling $88.4 million, as compared to the first quarter 2007 balance of $95.9 million", stated Hanif Jamal, Dot Hill's chief financial officer. "Our largest OEM customer contributed just over 65 percent of total net revenue for the second quarter of 2007, which is down from 84 percent for the second quarter of 2006 and 76 percent for the first quarter of 2007. At the same time, net revenue from customers other than our largest OEM customer grew to $19.5 million, an increase of 84 percent from the second quarter of 2006 and 52 percent from the first quarter of 2007. We also exited the quarter with a strong backlog of $12.3 million."

"The company is targeting third quarter 2007 net revenue in the range of $50 to $54 million and a net loss per share in the range of $0.09 to $0.14 on a fully diluted basis. We remain cautious with respect to our near-term guidance while we continue our transitions on a number of corporate objectives."

"During the second quarter of 2007, Dot Hill made progress on many fronts", stated Dana Kammersgard, president and chief executive officer of Dot Hill. "We essentially completed the shift from a predominantly US-based supply chain to an offshore manufacturing model with our partners MiTAC and Synnex for our 2000 series products and began initial shipments of these products to customers. All that remains to complete this transition is for us to ship the planned buffer inventory that we had built at our previous contract manufacturer. Late in the quarter, we commenced production shipments of a couple of products to one of our large OEM customers, and we added six new OEMs for our new 2000 series products during the quarter as well, thus advancing our revenue diversification goals. We also began shipping the 2330 iSCSI storage product to a select group of customers."

"We believe that Dot Hill took some major steps to advance the goals of our 'Quiet R/Evolution', which include transforming the company from a dependency on a single customer to a diverse revenue stream, from a technology integrator to a technology innovator and from an onshore supply chain to a predominantly offshore supply chain. While these transitions create unpredictability, we believe they will facilitate the company's to return to profitability."