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Network Engines server sales plummet

The struggling maker of specialized servers reports a net loss of $22.8 million for the quarter ended March 31, including an $8.7 million write-off of inventory.

Network Engines, a struggling maker of specialized servers, reported a net loss of $22.8 million for the quarter ended March 31, including an $8.7 million write-off of inventory.

With revenue of $2.5 million, that meant the company lost a dollar for every dime it took in. The revenue total was a 59 percent drop from the year-ago quarter, when the company took in $6.1 million, the company reported Thursday.

Excluding one-time charges, the company had a pro forma net loss of $11.2 million, or 33 cents a share, compared with a net loss of $3.5 million, or 14 cents a share, for the year-ago quarter.

The Canton, Mass.-based company announced earlier this month it would lay off 30 percent of its employees, for which the company is taking a $3.5 million charge this quarter. With the layoffs, consolidated operations in Europe and delayed expansion into Asia, the company expects to cut its expenses down to $8 million a quarter.

Network Engines is in the midst of a transition to a new server line, but the change hasn't been easy. In addition to the $8.7 million inventory write-off, the company had to write off $1.2 million in assets related to production and sale of the older generation of products, the company said.

The company named a new chief executive, John Curtis, in March. Founder and former CEO Lawrence Genovesi continues as chairman and chief technology officer.

No First Call analysts track the company.