Quantum Reports 19% Dip in Revenue
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.