Adaptec Buys Storage Virtualization Vendor Elipsan

UPDATED: Adaptec on Monday agreed to acquire storage virtualization vendor Elipsan. At the same time, the company reported a $3 million loss for its latest fiscal quarter and prepped new RAID systems.

Storage vendor Adaptec Inc. agreed to acquire Elipsan Ltd. Monday afternoon for an undisclosed amount, part of Adaptecs push into enterprise storage area networking. At the same time, the company reported a $3 million loss for its latest fiscal quarter.

Elipsan, a Bristol, U.K.-based designer of storage-virtualization software, represents the next step for Adaptec in enterprise storage. Having designed software and hardware that allows enterprises to build and integrate large collections of RAID arrays, the next step for the company was to acquire the software to manage it.

"As the market continues to migrate from internal to external, and from direct-attached to fabric-attached storage systems, Adaptec is committed to providing the highest levels of functionality, performance and reliability while simplifying storage management and keeping costs down," said Mark Delsman, vice president and chief technology officer in a statement. "Adding Elipsans technology to our existing portfolio will strengthen our end-to-end storage solution offering."

Financial terms of the deal were not disclosed.

Adaptec said in the statement that the Elipsan technology would be integrated directly into Adaptecs RAID subsystem lines, eliminating the need for a dedicated metadata server or third-party storage management software.

In addition, the company will announce two new products this week: on Wednesday, the company will launch an external iSCSI-to-Serial ATA storage array for channel resellers; and potentially on the same day, Adaptec will announce a Fibre Channel-to-Serial ATA RAID storage system and accompanying enclosure.

Meanwhile, the Milpitas, Calif. company reported results for its second fiscal quarter of 2004 ended Dec. 31. The company said it had a net loss of $3.0 million on revenues of $115.1 million; a year ago, the company reported a loss of $3.5 million and revenue of $109.0 million.

Adaptecs storage solutions business carried the bulk of the load, generating $102.8 million in revenue, an 11 percent jump compared to the same period a year ago. Adaptecs desktop solutions group and storage network group produced $10.9 million and $1.9 million in revenue, respectively.

For the companys third fiscal quarter ending in March, Adaptec predicted revenue would be flat, instead of the usual decline. "Our customers are reporting increased business activities and the market seems optimistic about IT spending," said Marshall Mohr, Adaptecs chief financial officer.

While the company works to enhance its enterprise product lines, Adaptec is busy cutting spending, including closing its Eurologic plant in Ireland during the fourth quarter in favor of a shift to Singapore production.

The two announcements scheduled for this week are designed to allow the company to enter the new iSCSI market with OEMs, as well as provide a second cost-effective Serial ATA solution, officials said.

Editors Note: This story was updated to include information and comments from a conference with analysts.