Quantum Counts Q3 Losses

Backup and archiving specialist Quantum enjoyed a revenue hike in its latest quarterly results but posted a net loss after factoring in the cost of its $770 million ADIC acquisition. (See Quantum Reports Earnings, Quantum Takes Tape Rival ADIC, and ADIC in De-Dupe Deal.)

The vendor posted third quarter revenues of $302 million, up 38 percent on the same period last year, but well below analyst estimates of $307.2 million.

On a GAAP basis Quantum posted a fiscal Q307 net loss of $9.5 million or 5 cents per share, compared to net income of $819,000 and breakeven per share in the third quarter of 2006, although these figures included over $30 million in stock-based charges, expenses, and costs related to the acquisition of its tape rival. (See Quantum Reports Earnings.)

On a non-GAAP basis, the firm reported net income of $9 million or 4 cents per share. This beat analyst estimates of 1 cent per share.

Speaking on a conference call earlier today, Rick Belluzzo, the Quantum CEO, nonetheless sought to put a positive spin on the results.Both firms' sales and marketing teams are now integrated and product roadmaps are defined, he explained, adding that the recently launched DXi product line is at the heart of this strategy. (See Quantum Leaps Into De-Duplication.) "We will continue to place strong emphasis on building our branded business," he said.

The DXi Series, which is the first stage in the vendor's plan to extend de-duplication technology across its product lines, will be generally available within the next 30 days, according to the exec. (See Quantum Delves Deeper Into De-Dupe.)

De-dupe, which eliminates multiple copies of the same file and repeated blocks or segments of data within those files, is expected to be one of the hottest storage technologies in 2007. (See Top Storage Predictions for 2007, The Year of Data Protection, and Users Look Ahead to 2007.) The idea behind the technology, which is gaining more and more attention from users, is that it reduces disk consumption and bandwidth required for backups.

Quantum is already reaping the benefits of the midrange tape technology it acquired as part of the ADIC deal, according to Belluzzo, with the CEO citing ADIC's Scalar platform as one of the strongest performer's in his firm's systems division.

Despite his upbeat take on the ADIC acquisition, Belluzzo admitted that there is integration work left to do. "Over the next few months, we will be delivering our integrated channel program," he said, adding that the firms' backend systems also need to be tied together. "That will have benefits to the company in a wide range of areas," he said, eluding to his goal to shave $15 to $20 million off the combined firm's operating costs in the next quarter.The CEO is also looking to boost the firm's tape story over the coming months in the face of flat revenues from DLT-based products. "We need to get a better competitive position on media," he said.

True to form, Quantum could not resist a swipe at its tape rival Sun, which is struggling with its own M&A challenges. (See Storage Slows Down Sun.) "We're an independent storage company with an independent go-to-market and an independent channel," said Jon Gacek, the vendor's CFO, during today's call, explaining that the firm is solely focused on selling backup and archive products. This, he added, is different than "other players" looking to sell broader portfolios of products. (See Sun, Hitachi Talk Storage and Sun Storage Chief: We're Not for Sale.)

The market was not exactly overwhelmed with Quantum's results. In after-hours trading, the vendor's shares fell 3 cents (1.21 percent) to $2.44.

James Rogers, Senior Editor Byte and Switch