11:00 AM -- Leaving the technology discussion for a bit, what about the state of a key player in the data de-duplication market? With Dell Inc. (Nasdaq: DELL)'s recent announcement of a partnership with Quantum Corp. (NYSE: QTM), a question emerged in many places, including here on the Byte and Switch forums: Is it safe to go with Quantum?
It is dangerous water to make predictions on a company's viability. Financial analysts that I talk to are careful to surround their statements with plenty of cover. But the facts are the stock has been beaten pretty badly over the past few months and it really has not seen a sustained run up for quite some time.
In fairness, stock price isnt everything. And with OEM relationships in place with Dell and EMC Corp. (NYSE: EMC), there is a silver lining in the storm clouds. The bigger concern for me is the $410 million in total debt as of Sept. 9, comprised of $250 million in acquisition debt and $160 million in convertible subordinated debt issued in 2003. Last quarter's interest payment on this debt was $7.5 million.
The main question, however, is if Quantum or any company in this situation is really safe. Well, obviously EMC and Dell think so. My guess is that there is some sort of escrow deal in place with Quantum and these two companies, where they get some sort of access to the source code if the worst-case scenario happens. EMC is full of developers, so it is fine. Dell probably has similar talent on staff, and if it doesn't it has the resources to go get them. If you are buying an EMC/Dell OEM system, I think your decision comes down to a technical one, versus the other players in the field.
Buying a Quantum system is an interesting situation to say the least. Based on their estimates and those of financial analysts that I trust, Quantum should be able to handle its debt load and be OK from a financial perspective if it can continue to meet or come close to its financial projections. One question is if the need to be careful with its money will impact the company's development of the platform, but only time will tell that story.George Crump is president and founder of Storage Switzerland, an IT analyst firm focused on the storage and virtualization segments. With 25 years of experience designing storage solutions for datacenters across the US, he has seen the birth of such technologies as RAID, NAS, ... View Full Bio