Quantum Reports 19% Dip in Revenue

By Chris Preimesberger  |  Posted 2009-01-29 Print this article Print

Despite a revenue decline, storage company Quantum's fiscal third-quarter GAAP gross margin rate was 42 percent, up from 35 percent in the third quarter of fiscal 2008 and the highest level Quantum has achieved in eight years, CEO Rick Belluzzo says.

Quantum, one of the few data storage companies that competes in the disk and tape hardware and software sectors, Jan. 29 reported its third-quarter fiscal year earnings. Like the results of many U.S. companies, Quantum's numbers weren't very pretty, but there were some positive points nonetheless.

The company reported a GAAP operating loss of $334 million and a net loss of $340 million, or $1.63 per share, in its third-quarter fiscal year earnings report. Quantum's total revenue of $204 million was down 19 percent from the previous year.

Quantum CEO Rick Belluzzo told eWEEK that the weaker revenue number was due to a combination of planned operational changes and the much weaker economic environment.

"Our strategy of shifting our sales mix toward higher-margin opportunities [in the disk storage sector] plus a year-over-year decline in branded tape sales and media royalties were key factors," Belluzzo said.

Despite the revenue decline, the company's GAAP gross margin rate was 42 percent, up from 35 percent in the third quarter of the previous fiscal year and the highest level Quantum has achieved in eight years, Belluzzo said.

Quantum also reported 100 percent year-over-year growth in disk systems and software revenue.

"About half [of the revenue loss] was known, based on [operational] decisions we made during the quarter. I think our revenue was weaker than we thought months ago because of the economic environment," Belluzzo said. "Revenue was definitely impacted and was below what we would have liked, but we more than made up for it because of our growth toward higher-margin businesses and expense management that we put in place."

One of those management moves was to lower staff head count. In November 2008, Quantum announced that it would trim 8 percent of its staff positions, amounting to about 180 jobs. Those layoffs are "largely completed," Belluzzo said.

Quantum generated $19 million in cash from operations for the quarter and, as of Dec. 31, 2008, had $51 million in cash and cash equivalents.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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