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MTI Halts Its Hardware

MTI Technology Corp. (Nasdaq: MTIC) has decided to throw in the towel on its storage system business, after struggling for the past year through restructurings and layoffs to keep its head above water (see MTI Running Low on Gas and MTI Stuck in Storage Slump).

The company, which until now has produced its own branded SAN and NAS systems, announced today that it will start reselling EMC Corp.'s (NYSE: EMC) full line of storage systems and software to its customers (see MTI to Resell EMC Gear). While MTI says it will continue supporting and servicing all of its own existing branded storage products for its installed customer base, today's news appears to be the execution notice for the its hardware development business. Instead, MTI is repositioning itself as a pure services company.

Robert Linsky, MTI's senior VP of product marketing and global strategies, says the company simply wasn't investing as much in the storage software as many of its competitors. Its products are "on parity with the rest of the industry," he says. "But we came to realize that if you're not No. 1, 2, or 3 in the space, why are you in the space?" [Ed. note: MTI just started wondering about this now???]

From now on, MTI will only sell EMC storage arrays. "For any disk-based storage solution, if a customer asks can you sell us something other than EMC, the answer is 'No,' " Linsky says. "There is a tremendous amount of trust between our two companies."

That may well be, but investors reacted negatively to the announcement, as the company's stock price took more than a 23 percent hit in trading today, slipping to close at $1.03.

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