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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.

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Stephen Shankland worked at CNET from 1998 to 2024 and wrote about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. He has a soft spot in his heart for standards groups and I/O interfaces. His first big scoop was about radioactive cat poop.
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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.