After a perfect storm of problems during the past year, Overland Storage said yesterday that Chief Executive Christopher Calisi is leaving the company.
Overland did not reveal whether Calisi, who took the reins of the San Diego company in 2001, was asked to resign by the company's board. But the writing appeared to be on the wall given Overland's troubles, which have resulted in a 52 percent decline in its share price this year.
Reached on his cell phone, Calisi, 46, declined to comment.
Board Chairman Scott McClendon, who was Overland's chief executive for a decade before Calisi was hired, will serve as interim chief executive. The board is starting a search for a new CEO immediately.
A maker of tape libraries, disk backup and other data storage products, Overland has been beset by missteps recently. The miscues started when Hewlett-Packard, Overland's largest customer, said it was phasing out the company as a supplier of tape libraries.
Overland, which made tape libraries for Hewlett-Packard to sell under its own brand name, thought it had struck a deal with Dell to replace HP as a customer. But last month Dell canceled its contract, citing delivery problems.
While the losses of HP and Dell were major blows, perhaps the most costly miscue for Overland was a botched attempt to outsource manufacturing.
Overland laid off 140 workers in San Diego when it hired a contractor to build its tape libraries in North Dakota. But the contractor failed to deliver the libraries on time and also suffered quality problems, according to Overland. The company never achieved the cost savings it envisioned.
It began moving manufacturing back to its San Diego headquarters this fall. Without the HP and Dell business, however, the operation will be much smaller. The company has hired about 80 workers for its manufacturing line.
“We had a number of problems this year,” McClendon said. “Some of the things like the manufacturing outsourcing and the loss of the Dell business created a situation where it became clear that things weren't working right.”
McClendon said that the board believes Overland's overall strategy can be successful with better execution.
“The board agrees with the strategy and vision, and the plans we had approved for a return to profitability,” he said. “Does it need tuning? We're checking into that.”
As part of a strategy review, board member Mark Barrenechea will head a committee of directors to explore where Overland should go from here. Some Wall Street analysts have said the company should be sold. Overland rejected a roughly $7.90 a share offer from a Seattle area suitor, Advanced Digital, last year.
Overland reported a net loss of $20 million for its most recent quarter compared with a loss of $2.9 million for the same quarter last year.
The loss included an $8.5 million write-off for shutting down ZettaSystems, a data storage software company in the Seattle area that Overland acquired in August 2005.
Overland's shares ended yesterday up 6 cents at $3.88 on the Nasdaq.
Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com
