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Adaptec Looking to Adapt

Its traditional controller business in trouble, Adaptec is shopping for software companies that could help beef up revenue.

CEO Sundi Sundaresh said during Adaptec's earnings call Tuesday night the future of the company could depend on its adding new technology and revenue.

"We're actively seeking acquisitions to provide us critical mass in products and revenue," Sundaresh said. "The ability to complete such an acquisition is critical to our success."

Adaptec's latest earnings prove that. (See Adaptec Reports Earnings.) The company lost $5.1 million last quarter on revenues of $60.7 million, down from $86.6 million in revenues from the same quarter last year. The results were no surprise, as Adaptec revealed three weeks ago that it would fall short of its previous guidance because of lower revenues than expected on sales of components for IBM's xServer line. (See Adaptec Lowers Outlook.)

On his call with analysts, Sundaresh emphasized what Adaptec needs to do to turn things around. "We're clearly not satisfied with our current financial model," says Sundaresh, who replaced Bob Stephens as CEO in November of 2005. (See Adaptec Prez Named CEO.)

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