quantum delivers solid revenue performance and improved operating results in fiscal third quarter

01/feb/2007 11.00.00 CynthiaCartaAdv. Contatta l'autore

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quantum delivers solid revenue performance and improved operating results in fiscal third quarter

 

SAN JOSE, Calif., Jan. 30, 2007 - Quantum Corp. (NYSE:QTM), the leading global specialist in backup, recovery and archive, today announced that revenue for its fiscal third quarter (FQ3’07), ended Dec. 31, 2006, was $302 million. Following Quantum’s acquisition of Advanced Digital Information Corp. (ADIC) in late August, this was the first full quarter in which the two companies operated as one. As a result, Quantum increased revenue 38 percent over the same quarter last year (FQ3’06).

 

The company reported GAAP operating income of $3.7 million, up 24 percent from FQ3’06 and its best performance in two years. This $3.7 million in FQ3'07 operating income reflected a number of major expense items totaling $18.3 million: $14.0 million in amortization of intangibles, $2.5 million in stock-based compensation charges and $1.8 million in ADIC transition-related expenses. Including these items, and net interest and other expense of
$13.0 million, the net loss for the December quarter was $9.5 million, or 5 cents per diluted share, compared to breakeven performance per diluted share in FQ3’06. Quantum also generated $6.8 million in cash from operations during FQ3’07 and paid down $7.8 million of debt.

 

“As we’ve integrated ADIC over the last five months, the strength and promise of the new Quantum has become even clearer, and this is reflected in our December quarter results,” said Rick Belluzzo, chairman and CEO of Quantum. “We delivered on our revenue goal, greatly improved our operating results and demonstrated significant progress in driving toward our target business model. We also announced our new DXi-Series disk-based appliances with
de-duplication and replication technologies and had a strong quarter of software sales, both of which speak to the broader opportunities we now have in growing markets.”

 

Quantum’s gross margin rate for the December quarter was 29.5 percent, slightly higher than the same quarter last year. Operating expenses were $85 million, up from $61 million in FQ3’06 primarily as a result of the ADIC acquisition, but well within the guidance Quantum had provided for the quarter. Quantum generated an estimated $15 million in synergy savings in FQ3’07, which exceeded its expectations for the quarter and indicated the company’s success in driving toward its goal of $20 million in quarterly cost synergies.

 

Quantum’s product revenue, which includes sales of the company’s hardware and software products and services, totaled $273 million in the December quarter. This represented a net increase of $88 million over FQ3’06, as higher system sales - largely, but not solely, due to the ADIC acquisition - outweighed a year-over-year decline in devices and non-royalty media revenue. Of the total product revenue, 54 percent was sold through branded channels and
46 percent through OEMs. Quantum’s goal is to grow the branded portion of its product revenue to 60 percent over the next few quarters, thereby also improving the company’s gross margin rates.

 

Systems revenue, which includes sales of tape automation, disk-based backup systems and software, totaled $154 million in FQ3’07, compared to $51 million in the same quarter last year. Quantum’s midrange tape automation line was one of the strongest contributors to total systems revenue in the December quarter, on both a branded and OEM basis. In addition, Quantum also achieved year-over-year increases in its DX-Series disk-based backup and StorNext software revenues.

 

Revenue from devices (tape drives and removable hard drives) and non-royalty media sales totaled $81 million in FQ3’07, down $33 million from FQ3’06. Nearly this entire decline was due to the continuing retirement of older tape drives, with approximately two-thirds of the revenue reduction in older, entry-level drives sold by OEMs.

 

Revenue in the “services and other” category - which includes hardware service contracts as well as repair, installation and professional services - was $38 million in the December quarter. This represented an increase of $18 million from FQ3’06.

 

Revenue from tape media royalties totaled $29 million in FQ3’07, down about $4.5 million from FQ3’06. LTO royalty revenue increased year-over-year but was offset by the decline in DLT® royalties resulting from the net reduction in the installed base of DLT tape drives.

 

In providing guidance for its fiscal fourth quarter of 2007 (FQ4’07), Quantum said it expected revenue of approximately $290 million, reflecting the seasonal revenue fall-off Quantum typically experiences between its third and fourth fiscal quarters. The company also expects gross margin rates in the range of 29 percent to 30 percent and operating expenses of approximately $80 million. The gross margin rate includes the impact of approximately $9 million in amortization of intangibles and stock-based compensation charges, while the operating expense figure includes approximately $8 million to $9 million related to these two items.

 

 

About Quantum

Quantum Corp. (NYSE:QTM) is the leading global storage company specializing in backup, recovery and archive. Combining focused expertise, customer-driven innovation, and platform independence, Quantum provides a comprehensive, integrated range of disk, tape, and software solutions supported by a world-class sales and service organization. As a long-standing and trusted partner, the company works closely with a broad network of resellers, OEMs and other suppliers to meet customers’ evolving data protection needs. Quantum Corp., Technology


www.quantum.com.

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Quantum, the Quantum logo, DLT and DLTtape are trademarks of Quantum Corporation registered in the United States and other countries. DX, DXi and StorNext are trademarks of Quantum Corporation. All other trademarks are the property of their respective owners. 

 

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, without limitation, statements relating to: (1) the strength and promise of the new Quantum and the broader opportunities we now have in growing markets; (2) our cost synergy and branded revenue goals and our ability to meet them; and (3) our expectations regarding FQ4’07 revenue, gross margin rate, operating expenses, amortization of intangibles and stock based compensation charges. More detailed information about these risk factors, and additional risk factors, are set forth in Quantum's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors," on pages 40 to 50 in Quantum's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006 and pages 14 to 25 in Quantum's Annual Report on Form 10-K for fiscal year 2006, filed with the Securities and Exchange Commission on June 12, 2006. In particular, you should review the risk factors on pages 40 through 42 of our Form 10-Q under the headings “A large percentage of our sales come from a few customers, and these customers have no minimum or long-term purchase commitments. The loss of, or a significant reduction in demand from, one or more key customers could materially and adversely affect our business, financial condition, and operating results”, " From time to time we make acquisitions, such as the recent acquisition of ADIC. The failure to successfully integrate recent or future acquisitions could harm our business, financial condition, and operating results ", “In connection with the acquisition of ADIC, we drew on our $500 million credit facility with Key Bank, substantially increasing our debt service obligations and constraining our ability to operate our business. If we are unable to generate sufficient cash flow from operations to meet these debt obligations, our business financial condition and operating results will be materially and adversely affected”, “Our credit agreement contains various covenants that limit our discretion in the operation of our business, which could have an adverse effect on our business, financial condition, and results of operations”, “Our operating results depend on new product introductions, which may not be successful, in which case our business, financial condition, and operating results may be materially and adversely affected”, and “Competition has increased, and may increasingly intensify, in the tape drive and tape automation markets as a result of competitors introducing products based on new technology standards, which could materially and adversely affect our business, financial condition, and results of operations.” Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

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Cynthia Carta Adv.
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Cynthia Carta Adv.
Advertising Communication
Via Novara, 216 20153 Milano
Ph. ++39(0)2 40918411
Fax ++39(0)2 40916614
Mobile++39 3385909592
e-mail cyncarta@virgilio.it
cyncarta@cynthiacartaadv.it
www.cynthiacartaadv.it
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