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Iron Mountain Sets Its Sights High

When we hear the term "information technology" (IT), most of us think of digitally generated information, yet physical information, such as paper documents and printed photographs, still play a large role in our lives. Iron Mountain is a unique IT vendor in that its spans both the physical and digital information worlds, as well as the hybrid territory that links the two. That is significantly different from traditional hardware, software, and services vendors, so it should come as no surprise that Iron Mountain has an interesting business model story to tell.

Iron Mountain will celebrate its 60th anniversary next year but has experienced a 6X growth spurt in the last 10 years, which also saw the company make a number of key acquisitions. As a result, Iron Mountain is the unquestioned leader in the physical information management services business, including the well-known storage of paper documents, as well as magnetic tape storage media for backup and deep archiving purposes. Iron Mountain thoroughly understands the major opportunity the digital world represents and has augmented earlier acquisitions of such companies as Connected and LiveVault with the more recent purchases of Stratify and Mimosa Systems.

Still the vast majority of Iron Mountain's revenues come from physical information. That is good for the company's digital information efforts in that the physical side of the business generates cash which can be used for digital solution development and acquisitions. That is critical as with its smaller scale (relative to other IT vendors). Iron Mountain Digital has growth potential, but its current size, coupled with its ambitious growth goals, implies the need for selected additional acquisitions.

Iron Mountain held its industry analyst day in Boston on March 25. Analyst meetings tend to follow a similar theme. They start off with high-level presentations on vendor strategy and vision, then move on to more detailed discussions in one-on-one meetings and breakout sessions that delve into particular products or services and testimonials by clients and partners. Bob Brennan, president and CEO, started off the analyst event by discussing the strategy and vision of Iron Mountain's global leadership in information management services.

In 2009, the company reported total revenues of $3.01 billion, representing 3 percent internal revenue growth over 2008, a strong showing given the current economic conditions. It has shown growth for each of the last 20 years. The really important thing is that with its strong cash-generating position, Iron Mountain is in the enviable and relatively rare position of being able to create value (including its first shareholder payout program), as well as to continue investing in future growth, such as its recent $112 million acquisition of Mimosa Systems. By focusing on services that have recurring revenues and inherent growth Iron Mountain is blessed with bedrock financials but faces an ongoing challenge in continuing its green-thumb investing decisions.

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