Tandberg Bags Exabyte for $28M

Three months after putting itself on the block, struggling tape library vendor Exabyte found a buyer today in its Norwegian rival Tanderberg Data, which bought it for $28 million. (See Tandberg Pays $28M and Exabyte Goes on Block.)

Although Exabyte had been on a downward spiral for years, Tandberg expects to keep its products, and says it will offer all Exabyte employees positions, and it hopes CEO Tom Ward and his management team stay on.

While most of Tandberg's tape products are midrange LTO systems that compete with the likes of Hewlett-Packard, IBM, and Quantum, Exabyte builds most of its products around its 8-millimeter VXA tape technology and competes in the low end against Dell, HP, and Quantum.

"There's some overlap, but we think a majority of the products are complementary," says Ken Cruden, executive VP of Tandberg's Americas division in San Diego. "We're excited about their automation potential, and their XGA drive business."

"I wouldn't characterize it as a lot of heavy competition," says Bob Abraham of Freeman Reports, a market research firm. "They're mostly different technologies. This one makes sense strategically, although I can't speak to whether it makes sense financially. Neither company is a powerhouse financially, and Exabyte has been quite weak."Boulder, Co.-based Exabyte has been on a steady decline since it peaked in 1990 with $170 million in revenue. That number was down to $91 million in 2005, and its $19.5 million in its last quarter decreased from $24 million the previous year. Exabyte's headcount slipped from nearly 1,200 employees in 1993 to 170 today. It has lost money for the last five years. "It was hard for them to move into new territory," Abraham says.

The deal comes a week after Quantum closed its $770 million purchase of rival ADIC in a similar but far larger deal of tape library vendors (See Quantum Takes Tape Rival ADIC and Quantum Acquires ADIC.)

Can we expect more consolidation? "One has to ask who's left, but yes," Abraham says. "The industry does indeed get smaller and smaller."

Dave Raffo, News Editor, Byte and Switch