Business News

Quantum Corporation Reports Fiscal First Quarter Results


Quantum Corporation

2008-07-29 15:05:00

Quantum Corporation Reports Fiscal First Quarter Results

Quantum Corporation Reports Fiscal First Quarter Results

Grows Disk Systems and Software Revenue 100 Percent Year-Over-Year With Significant Contribution From New DXi7500 Enterprise De-Duplication and Replication System

SAN JOSE, CA–(EMWNews – July 29, 2008) – Quantum Corp. (NYSE: QTM), the leading global

specialist in backup, recovery and archive, today announced that revenue

for its fiscal first quarter (FQ1’09), ended June 30, 2008, was $222

million. Although this represented a 10 percent decline from the same

period last year (FQ1’08), the company’s non-royalty branded revenue grew

by 3 percent. The greater mix of branded sales also helped increase the

overall GAAP gross margin rate from 32 to 34 percent, year-over-year. In

addition, Quantum’s GAAP operating expenses of $81 million were down $11

million, $9 million of which was related to restructuring charges incurred

in FQ1’08.

Quantum reported a GAAP net loss of $14 million for FQ1’09, or 7 cents per

share, a 4-cent improvement over FQ1’08. This $14 million net loss included

$11 million in amortization of intangibles and $3 million in stock-based

compensation charges, and the net impact of these items reduced earnings

per share on a diluted basis by approximately 7 cents.

One of the major highlights of the quarter was the growth in Quantum’s disk

systems and software sales. Product and service revenue in this category

totaled $20 million, an increase of 100 percent over FQ1’08 and 60 percent

over the prior quarter. Quantum’s newly released DXi7500 enterprise

de-duplication and replication system was a significant contributor to this

growth, and the company also received revenue from its software license

agreement with EMC.

Quantum generated $26 million in cash from operations for the quarter and

paid down

$50 million of debt. The company’s cash balance as of June 30, 2008 was $67


“Although the June quarter was a transitional one in many ways, we

demonstrated significant progress in several key areas,” said Rick

Belluzzo, chairman and CEO of Quantum. “We achieved record disk systems and

software revenue with just a month’s contribution from our branded DXi7500

shipments and expanded relationship with EMC. We also had record service

revenue and increased both our branded revenue and gross margin rate. And

our cash generation enabled us to pay down an even larger amount of debt

than we have in recent quarters. While we have more work to do, all of this

reflects our continuing focus on further improving our operating model and

delivering a stable and more profitable revenue stream by growing our

branded business.”

Quantum’s product revenue, which includes sales of the company’s hardware

and software products, totaled $158 million in the June quarter. This

represented a net decrease of

$24 million from FQ1’08, primarily due to an expected decline in overall

OEM revenue. Sales of branded devices and tape automation were also lower

on a year-over-year basis, while revenue from branded disk systems,

software and non-royalty media grew.

Disk systems and software product revenue was $18 million in FQ1’09, double

the $9 million generated in the same period last year. Quantum now has more

than 300 DXi-Series customers, with a number of significant DXi7500 wins

secured, both in the U.S. and abroad, during the June quarter. These wins

include multiple unit purchases by a top U.S. cable company, a leading

supplier of broadband service in Europe and a major electrical utility

supplier in Australia, as well as deals with one of America’s most

respected newspaper publishers, a large operator of luxury resorts and

casinos in Las Vegas, and various governmental agencies. A majority of

DXi7500 customers bought a replication license and nearly half purchased

the path-to-tape option, reinforcing the unique value Quantum provides by

offering a single family of disk-based de-duplication and replication

solutions for remote sites, midrange offices and primary data centers and

by delivering integrated tape creation for enterprise customers.

Tape automation product revenue totaled $86 million in the June quarter, a

decrease of

$22 million from the comparable period last year, with two-thirds of the

decline related to OEM products and the other third mainly due to lower

branded sales in North America.

Product revenue from devices and non-royalty media sales totaled $54

million in FQ1’09, down

$10 million year-over-year. This was largely the result of an anticipated

decline in OEM device revenue offset by a slight increase in branded

non-royalty media sales.

Service revenue, which includes hardware service contracts as well as

repair, installation and professional services, was $42 million in FQ1’09.

This was an increase of $2 million over FQ1’08 and a new record for


The company had $22 million in royalty revenue for the June quarter, down

$2 million from the comparable quarter in Fiscal Year 2008.

Quantum increased its branded share of non-royalty revenue to 66 percent in

FQ1’09, from

58 percent in FQ1’08.

Conference Call and Audio Webcast Notification

Quantum will hold a conference call today, July 29, 2008, at 2:00 p.m. PDT,

to discuss its fiscal first quarter results. Press and industry analysts

are invited to attend in listen-only mode. Dial-in number: (303) 262-2130

(U.S. & International). Quantum will provide a live audio webcast of the

conference call beginning today, July 29, 2008, at 2:00 p.m. PDT. Site for

the webcast and related information:

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. This includes


DXi-Series, the first disk backup solutions to extend the power of data

de-duplication and replication across the distributed enterprise. 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., 1650 Technology Drive, Suite 800, San

Jose, CA 95110, (408) 944-4000,

Quantum and the Quantum logo are trademarks of Quantum Corporation

registered in the United States and other countries.

DXi is a trademark 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 may contain “forward-looking” statements

within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are based on management’s current expectations and are

subject to certain risks and uncertainties. As a result, actual results may

differ materially from the forward-looking statements contained herein.

Factors that could cause actual results to differ materially from those

described herein include, but are not limited to: (a) the failure to

compete successfully in the highly competitive and rapidly changing

marketplace for backup, recovery, archive and other storage products and

services; (b) our ability to successfully execute to our product roadmaps

and timely ship our products; (c) the risk that lower volumes and

continuing price and cost pressures could lead to lower gross margin rate;

(d) media royalties from media manufacturers coming in at lower levels than

expected; (e) operational risks associated with the changes being made to

our manufacturing infrastructure; (f) acceptance of, or demand for, our

products being lower than anticipated; and (g) difficulties in retaining

key employees. 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 “Risk

Factors,” on pages 12 to 22 of Quantum’s Annual Report on Form 10-K for

fiscal year 2008, filed with the Securities and Exchange Commission on June

13, 2008. Quantum expressly disclaims any obligation to update or alter its

forward-looking statements, whether as a result of new information, future

events or otherwise.

                            QUANTUM CORPORATION


                ( In thousands, except per-share amounts )

                                                     Three Months Ended


                                                    June 30,     June 30,

                                                      2008         2007

                                                  -----------  -----------

                                                  (Unaudited)  (Unaudited)


  Product                                         $   157,584  $   181,631

  Service                                              42,257       40,104

  Royalty                                              21,950       24,033

                                                  -----------  -----------

    Total revenue                                     221,791      245,768

Cost of Revenue:

  Product                                             115,003      137,143

  Service                                              31,949       30,331

  Restructuring charges related to cost of

   revenue                                                 --          237

                                                  -----------  -----------

    Total cost of revenue                             146,952      167,711

                                                  -----------  -----------

      Gross margin                                     74,839       78,057

Operating expenses:

  Research and development                             18,990       26,358

  Sales and marketing                                  40,037       35,356

  General and administrative                           22,025       21,517

  Restructuring charges (benefit)                         (50)       9,114

                                                  -----------  -----------

                                                       81,002       92,345

                                                  -----------  -----------

Loss from operations                                   (6,163)     (14,288)

Interest income and other, net                          1,482        4,357

Interest expense                                       (8,775)     (13,634)

                                                  -----------  -----------

Loss before income taxes                              (13,456)     (23,565)

Income tax provision (benefit)                            882         (980)

                                                  -----------  -----------

      Net loss                                    $   (14,338) $   (22,585)

                                                  ===========  ===========

Basic and diluted net loss per share              $     (0.07) $     (0.11)

Basic and diluted weighted average common and

 common equivalent shares                             206,915      198,289

Included in the above Statements of Operations:

Accelerated depreciation on legacy IT system      $        --  $     2,179

Retention expense:

      Cost of revenue                                      --          166

      Research and development                             --           --

      Sales and marketing                                  --           --

      General and administrative                           --           --

                                                  -----------  -----------

                                                           --          166

Amortization of intangibles:

      Cost of revenue                                   6,918        8,509

      Research and development                            100          205

      Sales and marketing                               4,131        4,223

      General and administrative                           25           25

                                                  -----------  -----------

                                                       11,174       12,962

Share-based compensation:

      Cost of revenue                                     355          366

      Research and development                            765          859

      Sales and marketing                                 741          583

      General and administrative                          833        1,042

                                                  -----------  -----------

                                                        2,694        2,850

                            QUANTUM CORPORATION


                             ( In thousands )

                                                     June 30,    March 31,

                                                       2008        2008

                                                    ----------- -----------

                                                    (Unaudited)     *


   Current assets:

      Cash and cash equivalents                     $    67,486 $    93,643

      Accounts receivable, net                          149,464     182,998

      Inventories                                        78,525      75,995

      Deferred income taxes                              12,327      12,060

      Other current assets                               31,345      30,601

                                                    ----------- -----------

         Total current assets                           339,147     395,297

   Long-term assets:

      Property and equipment, less accumulated

       depreciation                                      36,352      39,271

      Service parts for maintenance, less

       accumulated amortization                          75,753      77,211

      Purchased technology, less accumulated

       amortization                                      67,649      74,667

      Other intangible assets, less accumulated

       amortization                                      71,067      75,223

      Goodwill                                          390,776     390,776

      Other long-term assets                             12,812      13,280

                                                    ----------- -----------

         Total long-term assets                         654,409     670,428

                                                    ----------- -----------

                                                    $   993,556 $ 1,065,725

                                                    =========== ===========

Liabilities and Stockholders' Equity

   Current liabilities:

      Accounts payable                              $    87,676 $    97,965

      Accrued warranty                                   18,519      19,862

      Deferred revenue, current                          71,665      73,525

      Current portion of long-term debt                   4,000       4,000

      Accrued restructuring charges                       3,341       3,834

      Other accrued liabilities                          86,142      82,997

                                                    ----------- -----------

         Total current liabilities                      271,343     282,183

   Long-term liabilities:

      Deferred revenue, long-term                        31,757      31,152

      Deferred income taxes                              13,887      13,640

      Long-term debt                                    286,000     336,000

      Convertible subordinated debt                     160,000     160,000

      Other long-term liabilities                        14,024      14,746

                                                    ----------- -----------

         Total long-term liabilities                    505,668     555,538

   Stockholders' equity                                 216,545     228,004

                                                    ----------- -----------

                                                    $   993,556 $ 1,065,725

                                                    =========== ===========

* Derived from the March 31, 2008 audited Consolidated Financial Statements

                            QUANTUM CORPORATION


                              (In thousands)

                                                     Three Months Ended


                                                    June 30,     June 30,

                                                      2008         2007

                                                  -----------  -----------

                                                  (Unaudited)  (Unaudited)

Cash flows from operating activities:

   Net loss                                       $   (14,338) $   (22,585)

   Adjustments to reconcile net loss to net cash

    provided by (used in) operating activities:

      Depreciation                                      4,508        9,667

      Amortization                                     16,251       17,575

      Realized gain on sale of investment                  --       (2,122)

      Deferred income taxes                               (20)          17

      Share-based compensation                          2,694        2,850

      Fixed assets written off in restructuring            --          360

      Changes in assets and liabilities, net of

       effects of assets held for sale:

         Accounts receivable                           33,534      (25,869)

         Inventories                                   (4,973)       6,730

         Service parts for maintenance                   (484)         131

         Accounts payable                             (10,289)      (6,839)

         Accrued warranty                              (1,343)      (3,862)

         Deferred revenue                              (1,255)        (459)

         Accrued restructuring charges                   (493)       1,976

         Other assets and liabilities                   1,722        1,165

                                                  -----------  -----------

Net cash provided by (used in) operating

 activities                                            25,514      (21,265)

Cash flows from investing activities:

   Purchases of marketable securities                      --      (65,000)

   Proceeds from sale of marketable securities             --       90,000

   Purchases of property and equipment                 (1,704)      (4,746)

                                                  -----------  -----------

Net cash provided by (used in) investing

 activities                                            (1,704)      20,254

Cash flows from financing activities:

   Borrowings of long-term debt                            --       50,000

   Repayments of long-term debt                       (50,000)     (26,250)

   Proceeds from issuance of common stock, net             33        2,678

                                                  -----------  -----------

Net cash provided by (used in) financing

 activities                                           (49,967)      26,428

Net increase (decrease) in cash and cash

 equivalents                                          (26,157)      25,417

Cash and cash equivalents at beginning of period       93,643       59,926

                                                  -----------  -----------

Cash and cash equivalents at end of period        $    67,486  $    85,343

                                                  ===========  ===========

Brad Cohen
Public Relations
Quantum Corp.
(408) 944-4044

Marilyn Keys
Investor Relations
Quantum Corp.
(408) 944-4450

free cash grants, free grant money, free money, cash grants, scholarships, business grants, foundation grants, government grants, debt grants, consolidation, college tuition, financial aid, medical grants, personal grants, medical bills, unsecured loans, no interest loans, financing, loans, capital, non profit organizations

Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89

Get Unlimited Organic Website Traffic to your Website now offers Organic Lead Generation & Traffic Solutions

Jerry Cruz

Tops SEO Expert, Social Media Influencer and Editor. Having published and edited more than 4700+ Articles in the last 6 years definately a PRO!

Related Articles

Back to top button