SOURCE: Quantum Corporation
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November 24, 2008 08:00 ET
Quantum Cuts Workforce and Other Expenses While Continuing to Increase Investment in Data Deduplication and Replication
SAN JOSE, CA--(Marketwire - November 24, 2008) - Quantum Corp. (NYSE: QTM), the leading global
specialist in backup, recovery and archive, today announced that it is
reducing its workforce by approximately eight percent (180 positions) and
taking other steps to decrease expenses, largely in response to the global
financial crisis and related market uncertainty. Quantum expects these
combined actions to result in annual savings of approximately $18 million,
and the company will see a partial benefit from the changes in its quarter
ending Dec. 31, 2008. Quantum's preliminary estimate of the costs
associated with these changes is approximately $4.4 million, consisting of
one-time termination benefits.
While reducing total expenses, Quantum will continue to increase investment
in its data deduplication and replication technology and its DXi™-Series
disk backup solutions. This reflects a key growth opportunity for the
company, and over the past six months it has established a stronger
leadership position in deduplication through the introduction of new
products, enhancements to its channel program, and closer collaboration
with both EMC and Dell.
"The expense reductions we are making are intended to provide additional
operating margin and incremental EBITDA growth as we confront the
challenges posed by the current macroeconomic environment," said Rick
Belluzzo, chairman and CEO of Quantum. "Despite these challenges, we remain
in compliance with all our debt covenants and expect to be in compliance
for the next twelve months. In addition, we continue to see strong demand
for our branded DXi™ products and are excited about partnering with EMC
and Dell to develop a common architecture that leverages our deduplication
and replication software and provides customers with even greater
flexibility and choice in meeting their data protection and disaster
recovery needs."
Earlier this month Dell announced that it is working with both Quantum and
EMC to create deduplication and replication compatibility across the three
companies' product offerings. Dell's announcement followed EMC's
introduction of new deduplication solutions incorporating Quantum's
software last May.
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
the DXi-Series, the first disk backup solutions to extend the power of data
deduplication 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, www.quantum.com.
Quantum and the Quantum logo are registered trademarks of Quantum
Corporation. 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 contains "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Specifically, without limitation, statements relating to: (1) the annual
savings of approximately $18 million the Company expects to be realized
from the changes announced today, (2) the Company's expectation that it
will see a partial benefit from these changes in its quarter ending
December 31, 2008, (3) the Company's preliminary estimate of the costs
associated with these changes of approximately $4.4 million, (4) the
Company's increased investment in its data deduplication and replication
technology and DXi-Series disk backup solutions, (5) data deduplication and
replication technology as a key growth opportunity for the company, (6) the
Company's expectation that it will be in compliance with its debt covenants
for the next twelve months, and (7) the Company partnering with EMC and
Dell to develop a common architecture that leverages our deduplication and
replication software are forward-looking statements within the meaning of
the Safe Harbor. 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 and our partners' product roadmaps, especially in the data
deduplication and replication markets; (c) the risk that lower volumes and
continuing price and cost pressures could lead to a lower gross margin
rate; (d) risks related to our debt obligations; (e) difficulties in
retaining key employees; and (f) our ability to successfully implement
these changes and realize the expected benefits. 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 and on pages 33 to 43 of Quantum's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2008, filed with the Securities and Exchange Commission on November 7,
2008. In particular, you should review the risk factors on pages 33 through
36 of our Form 10-Q under the headings: "In connection with the acquisition
of ADIC in 2006, we drew on a credit facility substantially increasing our
debt service obligations and constraining our ability to operate our
business. Unless we are able to generate sufficient cash flows from
operations to meet these debt obligations, our business financial condition
and operating results will be materially and adversely affected," "A large
percentage of our sales come from a few customers, and these customers
generally have no minimum or long-term purchase commitments. The loss of,
or a significant reduction in demand from, one or more key customers could
materially and adversely affect our business, financial condition and
operating results," "We derive almost all of our revenue from products
incorporating tape technology. If competition from alternative storage
technologies continues or increases, our business, financial condition and
operating results would be materially and adversely harmed," "Our credit
agreement contains various covenants that limit our discretion in the
operation of our business, which could have an adverse effect on our
business, financial condition and results of operations" and "We have taken
considerable steps towards reducing our cost structure and may take further
cost reduction actions. The steps we have taken and may take in the future
may not reduce our cost structure to a level appropriate in relation to our
future sales and therefore, these anticipated cost reductions may be
insufficient to bring us back to profitability." Quantum expressly
disclaims any obligation to update or alter its forward-looking statements,
whether as a result of new information, future events or otherwise.