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Quantum Reports Q1 Results

Quantum announces revenue for its fiscal Q1 was $222M, a 10% decline from the same period last year

SAN JOSE, Calif. -- Quantum Corp. (NYSE: QTM), the leading global specialist in backup, recovery and archive, today announced that revenue for its fiscal first quarter (FQ1'09), ended June 30, 2008, was $222 million. Although this represented a 10 percent decline from the same period last year (FQ1'08), the company's non-royalty branded revenue grew by 3 percent. The greater mix of branded sales also helped increase the overall GAAP gross margin rate from 32 to 34 percent, year-over-year. In addition, Quantum's GAAP operating expenses of $81 million were down $11 million, $9 million of which was related to restructuring charges incurred in FQ1'08.

Quantum reported a GAAP net loss of $14 million for FQ1'09, or 7 cents per share, a 4-cent improvement over FQ1'08. This $14 million net loss included $11 million in amortization of intangibles and $3 million in stock-based compensation charges, and the net impact of these items reduced earnings per share on a diluted basis by approximately 7 cents.

One of the major highlights of the quarter was the growth in Quantum's disk systems and software sales. Product and service revenue in this category totaled $20 million, an increase of 100 percent over FQ1'08 and 60 percent over the prior quarter. Quantum's newly released DXi7500 enterprise de-duplication and replication system was a significant contributor to this growth, and the company also received revenue from its software license agreement with EMC.

Quantum generated $26 million in cash from operations for the quarter and paid down $50 million of debt. The company's cash balance as of June 30, 2008 was $67 million.

"Although the June quarter was a transitional one in many ways, we demonstrated significant progress in several key areas," said Rick Belluzzo, chairman and CEO of Quantum. "We achieved record disk systems and software revenue with just a month's contribution from our branded DXi7500 shipments and expanded relationship with EMC. We also had record service revenue and increased both our branded revenue and gross margin rate. And our cash generation enabled us to pay down an even larger amount of debt than we have in recent quarters. While we have more work to do, all of this reflects our continuing focus on further improving our operating model and delivering a stable and more profitable revenue stream by growing our branded business."

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