Isilon Sytems (ISLN): Double Revenue, Share Cut In Half

Isilon Systems (ISLN) doubled its revenue in the first half of the year. The cluster storage company had revenue for the six-month period ended July 1, 2007 was $46.7 million, up 96 percent compared with $23.8 million in the same period of 2006. The market took the shares down 33% to $9.95 and they are now off by almost two-thirds from the 52-week high of $28.50.

But, in the last quarter, expense rose from $11.4 million to $17.9 million which increase the company’s operating loss from $4.3 million to $4.8 million. Someone did not watch those costs.

And then the company dropped the hammer on investors: Isilon is lowering guidance for total revenue for the full year 2007, and now expects total revenue to be in the range of $98 million to $105 million, which represents year over year growth in the range of 57 percent to 69 percent.

The company said third quarter sales growth would be even slower than for the entire year.

Investors just go used to that 96% growth rate.


Douglas A. McIntyre