Also, please note that in addition to reporting financial results in accordance with Generally Accepted Accounting Principles, or GAAP, Xyratex routinely reports certain non-GAAP financial results. These non-GAAP measures, together with the corresponding GAAP numbers and reconciliation to GAAP, are contained in our earnings press release. We encourage listeners to review these items.Before I turn it over to Richard, I would like to make you aware that following the direction we outlined in our last call to take advantage of the increasing technology synergies within the company to better serve the business opportunities we see, we've taken the decision to consolidate our organizational governance and operate as a single entity as opposed to our historical dual divisional structure. As a result, we will now be reporting under a single financial structure. We will continue to provide supplemental segment analysis for our Enterprise Data Storage Solutions, formerly referred to as Networked Storage Solutions, and our Hard Disk Drive Capital Equipment product, formerly referred to as Storage Infrastructure. And we'll refer to these statements -- refer to these segments as we discuss the overall business. I would now like to turn the call over to Richard to review the financial details of the quarter. Richard Pearce Thank you, Brad, and good afternoon, everyone. I'd like to thank you for joining us today. Our press release is available both on PR Newswire and our website. I'd now like to provide you with some commentary about our results for the first quarter. Please note that all numbers are in accordance with GAAP unless stated otherwise. Total revenue was $295.7 million, down 18% as compared to the first quarter of last year and down 24% from our prior fiscal quarter. Revenue was at the lower end of our expectations, primarily as a result of disk drive supply constraints in respect of our Enterprise Data Storage Solutions products.
Sales of our Enterprise Data Storage Solutions products were $272.1 million or 92% of total revenue. This is a decrease of 19% compared to the first quarter of last year and a decrease of 23% compared to our prior fiscal quarter. Sales of our capital equipment products were $23.6 million or 8% of total revenue, down 10% compared to the first quarter of last year and down 33% compared to our prior fiscal quarter.Gross margin was 17.9% for the quarter compared to 13.7% in the same period a year ago and 17.7% in our prior fiscal quarter. Gross margins were slightly higher than expected due to product mix. The gross margin for our Enterprise Data Storage Solutions products was 17.3% compared to 14.2% last year and 17.7% last quarter. In addition to product mix, the increase from the prior year was impacted by the sale of specific products without hard disk drives, as Steve would explain later. The gross margin for our capital equipment products was 25.5% compared to 9.7% last year and 18% last quarter. The prior-year margin was impacted by higher fixed cost base and inventory provisions. Non-GAAP operating expenses in the quarter were $39.6 million compared to $43.5 million in Q1 of last year and $44.3 million last quarter, reflecting the restructuring actions we implemented toward the end of last year and the deferral of some specific product development expense into Q2. On a non-GAAP basis, net income was $11.4 million or $0.40 per diluted share compared to net income of $7.5 million a year ago and net income of $20.8 million in the prior quarter. Turning our attention now to the balance sheet. Cash and cash equivalents at the end of the quarter was $155.8 million compared to $132.6 million at the end of Q4 and $90.8 million at the end of fiscal year 2010. Cash flow generated from operations was $34.2 million in the quarter. Read the rest of this transcript for free on seekingalpha.com