Imation Invests $20 Million in Exabyte

Tape storage company Exabyte Corp. will get a $20 million investment from Imation Corp., which will become the exclusive reseller of Exabytes VXA and Mammoth media brands.

The deal takes effect Nov. 17 and is part of Boulder, Colo., companys turnaround plan, Exabyte CEO and President Tom Ward said today. "It allows me to take my focus off the balance sheet in terms of trying to raise cash," he said in an interview.

VXA is Exabytes packet-based tape format. Mammoth is an older format, and LTO (Linear Tape-Open) is an industry-standard format, which Exabyte recently adopted as well.

For customers, "from a pricing standpoint, there should be no impact whatsoever. We will sell the media to Imation. Imation will then distribute the product" to its own and Exabytes current distributors, Ward said. Exabyte will still provide technical support, he said.

There are no plans for Imation, of Oakdale, Minn., which becomes a 5 percent investor in Exabyte, to acquire Exabyte, Ward said. But the deal will probably extend to Exabytes drives and library products in the future, he said.

IBM, which is Exabytes biggest VXA partner and is already an Imation partner, was preadvised on the deal, he said. The next-generation VXA-3 media is still on track to ship to partners, and to ship to users by early 2005, Ward added.

Exabyte gets half of the $20 million now and the rest in 30 days. "Within the next couple of quarters we will have a string of profitability in front of us," Ward predicted. Last week Exabyte announced its third-quarter 2003 earnings. The company took in $24.5 million with a loss of $12.6 million, compared with $22.7 million with a loss of $5 million in the second quarter, officials said. But the current loss includes "a $4.7 million special charge relating to the termination of certain real estate leases," they said. A conference call will be held Wednesday.

For Imation, the deal is an obvious one to gain market share, especially in Latin America, officials said.