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Dana W. Kammersgard, President, CEO and Director, & Hanif I. Jamal, SVP and CFO of Dot Hill Systems Corp. (HILL), Interview with The Wall Street Transcript

67 WALL STREET, New York - June 7, 2013 - The Wall Street Transcript has just published its Business and Application Software Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Application Software Consolidation Activity - Cloud Computing and SaaS Trends - Cloud Computing - SaaS and PaaS

Companies include: Dot Hill Systems Corp. (HILL)

In the following excerpt from the Business and Application Software Report, the President, CEO and Director & the SVP and CFO of Dot Hill Systems Corp. (HILL) discuss company strategy and the outlook for this vital industry:

TWST: So when you look at your goals and strategies for the next 12 to 24 months, can you distill those into an agenda for this company? What specific accomplishments in that time period would equal success for Dot Hill?

Mr. Kammersgard: Yes, so we have done that. We actually had a very successful Analyst Day on April 8 at the Nasdaq MarketSite, New York. And fundamentally speaking, we've been executing on two very simple strategic initiatives for the last two to three years, and those two strategic initiatives have three fundamental operational objectives, and there's no rocket science here. I certainly would never claim to be a rocket scientist. It's pretty simple. And for us, it boils all the way down to execution, and the two strategic initiatives are to focus on vertical markets that are resilient to macro and secular headwinds, and I have already identified at least two or three; one is media and entertainment, where the studios are still producing 3D movies regardless of what the economy is doing; telco infrastructure, where people like us and our smartphones are still producing videos and sharing information that has to land on storage in the AT&T and Sprint and Verizon infrastructures of the world; oil and gas, Big Data analytics, high-performance computing and digital image archiving, such as satellite mapping are the other applications. We think there's very strong growth at high margins there.

And the other strategic initiative is moving up the product stack into the midrange, and by doing so we move from an addressable market of $4 billion to an addressable market of $10.6 billion, 2.5 times as big. Those two strategic initiatives are designed to service three operational objectives, and those are very simple; one is to diversify our revenue, to get out from under a concentration cloud, if you will. We have progressively been reducing our concentration for several quarters in a row now. The second operational objective is to grow our top line. No surprise there. We've often characterized Dot Hill as a deep-value company with company-specific growth catalysts, and our Analyst Day objective was simply to provide the proof points in front of announcements of what those company-specific growth catalysts are, and how they are tied to the two strategic initiatives.

The third operational objective is margin expansion, and I think we've got very strong evidence of that. Last quarter, we posted 32% gross - first time in over five years that we've topped 30%. So if we look at what the company looks like in say, for example, the 2014 time frame against the backdrop of our industry growing maybe 4% per year, where we have a model in 2014 that ranges from $231 million to $301 million. So we hit $196 million, $197 million in 2012. We're forecasting...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.