Storage Soup

Nov 24 2008   10:55AM GMT

No solace for Quantum

Dave Raffo Dave Raffo Profile: Dave Raffo

Like the rest of corporate America, storage companies will spend the holiday season implementing cost-cutting measures to get through the current financial crisis.

Quantum today kicked off Thanksgiving week by disclosing it is chopping 180 jobs – about 8% of its workforce – and people inside the storage industry are waiting for larger vendors to announce layoffs in the coming weeks.

Quantum’s press release says the layoffs and other steps to decrease expenses will save the company around $18 million per year, after an initial $4.4 million cost to implement. Quantum emphasized it will increase its investment on data deduplication and replication, which leaves its declining tape business to feel the cuts.

The immediate goal of Quantum’s cuts is to get its stock price up. Quantum’s shares finished last week at a paltry $0.14. The New York Stock Exchange can delist Quantum if its shares do not rise to $1.00 by April 27. Quantum can also proceed with a reverse stock split that shareholders approved in August to raise its share price.

It’s certainly no surprise that Quantum is concentrating on dedupe for its disk backup appliances. Its disk and software revenue has been increasing mainly because of dedupe while its legacy tape business has declined over the past few quarters. EMC uses Quantum’s deduplication software with its backup disk libraries, and Dell recently said it would partner with Quantum to sell dedupe products next year.

Last week we reported privately held archiving vendor Copan Systems is laying off staff, giving unpaid leave to workers and slashing executives’ salaries while waiting to close a round of VC funding.

Hewlett-Packard, Dell, and Sun have all disclosed cost-cutting measures as well.

“Whether it’s a private or public company, everyone is feeling the crunch,” Pacific Growth financial analyst Kaushik Roy says. “The problem is that nobody knows if this is the bottom or if it could go down a lot more.”

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