Memorex Bought for a Pricey Song

$330 million for a brand name that could fuel Imation gains in optical drive market

January 21, 2006

3 Min Read
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Now that Memorex has been acquired for at least $330 million, how long will it take before we hear the slogan, Is it live or is it Imation?” (See Imation to Acquire Memorex.)

Probably never. The main reason Imation paid all that money is for the Memorex brand-name recognition, which Ella Fitzgerald helped create in a shattering 1970s TV commercial.

“That commercial has carried the company through the years,” Memorex CEO Michael Golacinski said today in a conference call to discuss the acquisition.

Besides $330 million in cash up front, Imation will pay between $5 million and $45 million over the next three years depending on financial performance.

Imation plans to ride Memorex success in DVD and CD consumer markets into a leadership position in products built on emerging high-capacity optical technology such as Blu Ray and High Definition-DVD (HD-DVD). Most of Imation’s revenue comes from tape cartridges -- although it also sells flash memory -- optical media, and floppy drives.Imation CEO Bruce Henderson emphasized that Memorex’s brand was its biggest asset. “We’re taking one of the world’s premier brands and combining with a strong data storage technology company.”

Nobody from either company spent much time expounding on what future technology will result from the deal, which Imation hopes to close by May. The Memorex brand will continue in Imation’s consumer business, which Golacinski will run. Henderson will focus on the business-to-business unit, which will primarily consist of Imation’s current and planned products.

One area where Memorex can expand Imation’s storage presence is in advanced optical media. Both Memorex and Imation have disclosed plans to ship disks this year based on the emerging Blu Ray and High HD-DVD technologies that store greater capacity on a disk. (See Memorex to Offer HD-DVD and Imation Intros Writable Optical Media.) Blue Ray DVDs hold up to 50 Gbytes on a double-layer disk, up from 8.5 Gbytes on standard DVDs.

While Blue Ray and HD-DVD drives will start off in consumer products, they could eventually join Ultra Density Optical (UDO) libraries in use for enterprise archiving. (See Archiving Adds Value to Old News and Optical WORMs Into Enterprise.) But Imation has a better chance of getting a foothold with Memorex’s strength in the consumer market than it did on its own.

Henderson today spoke of Memorex’s advanced optical technology, and said he expects Imation to use R&D resources to further advance that technology.“Mike’s group is going to have a storage candy store available to them,” Henderson says. “Anything they need, we can make it or already have it.”

The acquisition follows two other moves by Imation late last year to beef up its networked storage presence. In October it unveiled a hybrid disk drive/tape cartridge device that combines a removable SATA drive with LTO Ultrium tape. (See Imation Blends Tape, Disk.) The system, called Ulysses, is scheduled to ship early this year. In December Imation launched an email archiving appliance with partners Exabyte and Intradyn. (See Imation Archives Email.)

— Dave Raffo, Senior Editor, Byte and Switch

Organizations mentioned in this article:

  • Exabyte Corp. (Nasdaq: EXBT)

  • Imation Corp.

  • Memorex Products Inc.

  • Intradyn Inc.

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