JNI Reports Results for Second Quarter

JNI(R) Corporation today reported financial results for the second quarter ended June 30, 2001, and provided a second quarter summary and a second half 2001 focus.

According to JNI, Net revenues for the second quarter were $23.1 million, a sequential increase of 9% over $21.1 million for the first quarter of 2001, in line with the Company’s expectations. Contributing to this growth is the continuing market demand for JNI’s high quality Solaris-based products. Compared to the same period last year, second quarter net revenues decreased 4% from $24.0 million for the second quarter of 2000.

During the fourth quarter of 2000, the Company increased its 1 gigabit (Gb) product and associated component inventory levels in anticipation of continued strong sales momentum for these products. Observing that the anticipated increase in demand for these products did not materialize in the fourth quarter of 2000 and the first quarter of 2001, concurrent with the continuing downturn in overall IT spending, the Company determined that its current inventory levels were in excess of projected future demand for 1 Gb product, and recorded an excess inventory charge of $7.7 million. This reserve reduced second quarter gross margin to 26%. Excluding the effect of the inventory reserve, gross margin remained consistent with the first quarter, at 59.5% as compared to 58.8% for the second quarter of 2000.