The loan by EMC makes sense, because it has a fair amount of cash on its balance sheet -- about $9 billion -- and it needs Quantum to continue for a while. The relationship does seem to be working out for EMC, although I am not sure I can 100 percent back its claim of de-dupe leadership. Data Domain and Exagrid are also making similar claims, and they are in the conversation.
The first thing to read from this is that Quantum, despite being considered a player in the de-dupe space, a space that is growing like wildfire in this tough economy, was unable to get financing elsewhere, and EMC jumped in to loan it $100 million. The reason stated is that those very same tough economic times made it difficult for Quantum to get funding. I find that interesting.
Storage vendors in general, and de-dupe vendors in particular, are still getting funding. For example, Ocarina Networks secured $20 million at the end of February. Others in the de-dupe space like Exagrid and Septon are approaching profitability. In fairness, they were not asking for $100 million, and they were not going to use that to convert a credit facility -- but they are getting funding. Maybe it was just easier to get the money from EMC, maybe the terms were better, there could be a dozen reasons.
The point here is Quantum needed outside help. Despite being in a hot market, it was not able to overcome the debt, and it was clearly a problem, as I predicted in my original post about the issue. The other point is Quantum got it, so one of the major concerns I had last year about the firm has been put aside.