Tuesday, November 19, 2013

Overland Storage Financial Overview - Recent highlights

  • Disk product revenue for the first quarter of fiscal 2014 was up 4% compared to the preceding quarter and up 26% compared to the first quarter of fiscal 2013.
  • SnapServer DX Series product revenue in the first quarter of fiscal 2014 was $1.9 million, up 19% over the preceding quarter and up 34% compared to the first quarter of fiscal 2013.
  • Released SnapScale X4, a clustered NAS product that is designed to provide a high-density solution to efficiently manage growing amounts of unstructured data.
  • Amended San Diego lease reducing our square footage, resulting in an annual savings of over $1.2 million after February 2014.
  • Entered into a definitive agreement to acquire Tandberg Data Holdings S.à.r.l., a privately-held global leader of storage and data protection solutions. The sole consideration payablein the acquisition consists of shares of our common stock. The acquisition is currently expected to be completed by the end of December 2013, subject to customary closing conditions, shareholder and regulatory approvals.
  • Following the filing of the preliminary proxy for the Tandberg Data acquisition, the holders of convertible notes converted $10.7 million of convertible notes into shares of our common stock at $1.30 per share.
  • Received gross proceeds of $3.0 million from the sale of convertible notes under our amended and restated note purchase agreement entered into in November 2013 which provides for the issuance of for up to $7.0 million of convertible notes in the aggregate.
Comments on the Tandberg Deal:

"We are excited about our agreement to acquire Tandberg Data, which would create a company which had approximately $110 million in annual revenue in our last fiscal year and would provide substantial resources and cost synergies, enabling us to compete more effectively in the marketplace and move toward a clearer path to profitability following integration of the two companies," said Eric Kelly, president and CEO, Overland Storage. "With this acquisition, we would have a larger sales engine and expanded market reach to realize the growth potential of the innovative and award-winning products we have developed over the last couple years.
"During the quarter, we continued to see solid growth in revenue from our SnapServer DX Series, both from the immediately preceding quarter and year-over-year, and we remain on track to begin rolling out our mobility business solution in the first quarter of calendar 2014, which is designed to enable us to deliver the full functionality of true native applications to any mobile device anywhere as a workforce productivity solution. Moving forward, we expect our products to benefit from a substantially expanded channel of 16,000 partners as a result of our acquisition of Tandberg Data."

Monday, November 04, 2013

Quantum: Fiscal 2Q14 Financial Results

Revenue decreasing 11% due to Asia, US federal government and Europe

Quantum Corp. reported results for the second quarter of fiscal 2014, ended Sept. 30, 2013.
Revenue for the quarter was $131.4 million, down 11% from the second quarter of fiscal 2013, primarily as a result of softness in Asia and lower-than-expected revenue from the U.S. federal government and Europe.

Quantum achieved record revenue from sales of its big data management and archive solutions and also reported a higher gross margin rate and improved operating income and net income over the same quarter last year.

The GAAP gross margin for the quarter was 42.9 percent, up from 40.2% a year earlier, while the non-GAAP gross margin increased to 43.6 percent, from 41.4% in the same quarter a year ago. Combined with an 11% year-over-year reduction in GAAP and non-GAAP operating expenses, the higher gross margin resulted in improved operating and net income results.

On a GAAP basis, Quantum reported an operating loss of $5.0 million for the quarter, compared to a $10.0 million loss in the same quarter last year, and had a net loss of $8.0 million, or $0.03 per diluted share, compared to a net loss of $12.3 million in the prior year. On a non-GAAP basis, the company generated $1.0 million of operating income, an improvement from a $2.6 million operating loss a year ago. Quantum reported a non-GAAP net loss of $1.9 million, or $0.01 per diluted share, representing a $3.0 million improvement from a year earlier.

"Record quarterly revenue from big data management and archive sales - including several key Lattus storage object deals - helped support a year-over-year improvement in gross margin, operating income and net income," said Jon Gacek, president and CEO, Quantum. "Our better-than-expected operating results also reflected the strength of our business model and focus on driving profit and cash flow. However, the concerns we expressed as we entered the quarter regarding U.S. federal government spending were validated and were a major contributor to our total revenue falling short of expectations.
"In the second half of the fiscal year, we intend to build on our big data leadership in end-to-end content workflow with our newly announced StorNext 5 platform and Lattus, driving deeper into current vertical markets and expanding into others. We will also leverage our market share leadership in tape automation and our comprehensive data protection portfolio to support share gains in the data center, including deploying Lattus to address converged backup and archive needs. Finally, we are looking to extend our market reach through both existing and new channel and strategic partnerships. Throughout these efforts, we will continue to maintain our balanced approach to driving increased profit and cash flow while pursuing revenue growth."

For the third quarter of fiscal 2014, Quantum expects:
  • Revenue of approximately $133 million to $143 million.
  • GAAP gross margin of 41 to 42% and non-GAAP gross margin of 42 to 43 percent.
  • GAAP operating expenses of $60 million to $62 million and non-GAAP operating expenses of $55 million to $57 million.
  • Interest expense of $2.5 million and taxes of $500,000.
Business highlights for the September quarter include:
  • Quantum announced its new StorNext 5 platform. Based on a re-architected, high-performance engine, it extends the company's leadership in media and entertainment and offers new opportunities in other markets such as high-performance computing, oil and gas and analytics. StorNext 5 delivers up to 10 times greater performance and five times the scalability of previous StorNext versions - up to five billion files can be shared in a single file system. In addition, the new StorNext platform provides an intelligent framework for unified management of flash, disk, tape and object storage technologies from a single interface.
  • Extending the benefits of object storage to the data center, the company introduced a joint solution with CommVault for converged backup and archive. Based on Lattus object storage technology and CommVault Simpana 10 software, the solution enables a data protection and archive strategy that reduces primary storage costs and optimizes backup performance while minimizing management complexity, administrative overhead and capital expenditures in multi-petabyte environments.
  • Quantum also made it easier for prospective customers to experience a full-scale, cloud-based object storage testing environment with the launch of its new Lattus Demo Lab. Located inside Switch's SUPERNAP data centers, the Demo Lab enables proof of concept testing at the facility, either onsite or virtually, with no need for customers to provide their own equipment or resources.
  • Info-Tech Research Group named Quantum a Champion in its 2013 Disk Backup Vendor Landscape. It recognized the company based on its DXi-Series deduplication appliances' rich feature set, ease of scaling and management, and continued innovation in data protection. Quantum was also singled out with a Trend Setter Award, for innovation with upstream deduplication and the DXi V1000 virtual backup appliance, as well as for Dynamic Disk Pools technology.
  • The DXi6800 was named Product of Excellence in the Disk Backup Appliances category at the Storage Networking World 2013 China show

Friday, November 01, 2013

Overland Enter Into Definitive Agreement to Acquire Tandberg

Overland Storage, Inc. and Tandberg Data Holdings S.à r.l. announced a definitive agreement for Overland to acquire Tandberg Data, a privately held global leader of storage and data protection solutions that generated revenue for the twelve months ended June 30, 2013 of approximately $60 million on a US GAAP basis.

"The Overland and Tandberg combination will accelerate our strategy of becoming a global leader in the data management and data protection industry," said Eric Kelly, president and CEO, Overland. "With more than $100 million in annual revenue for the combined company during the last fiscal year, we expect the combination of these two businesses to provide us with a clearer path to profitability. The combined company will offer one of the broadest product lines and service offerings in the enterprise storage marketplace, and have the resources necessary to expand our market presence, fuel our growth and deliver innovative products and cloud offerings in the future."
"The combination of Overland and Tandberg will expand our geographical reach in Europe, Asia and the Middle East, as well as strengthen the R&D team. It will also enable us to leverage the world-class manufacturing facility in China."

"We look forward to joining forces with Overland and are excited to combine our substantial resources to create a stable platform for profitability, enabling greater focus on accelerating revenue growth," said Patrick Clarke, CEO, Tandberg. "Together we will be able to support our customers globally with over 16,000 channel and service partners."
Under the terms of the agreement:
  • 100% stock transaction.
  • Cyrus Capital, the owner of Tandberg, and other convertible debt holders will convert approximately 81% of their currently outstanding convertible debt into shares of Overland common stock at a price of $1.30 per share.
  • Eric Kelly will continue to serve as president and CEO of the combined company, Kurt Kalbfleisch will continue to serve as CFO and Randy Gast of Overland will serve in newly created position of COO.
  • Overland's board of directors will be expanded to seven directors, of which five will be current board members, and the other two of which will be new board members appointed by Cyrus Capital.
The acquisition is currently expected to be completed by the end of December 2013, subject to customary closing conditions, shareholder and regulatory approvals.

Tandberg Data Holdings S.à r.l is a supplier of storage and data protection solutions for small and medium-sized businesses, remote offices, departments and workgroups. Headquartered in Dortmund, Germany, Tandberg with offices around the world including the US, Japan, and France, and a manufacturing facility in China. It markets its solutions through a global channel of qualified resellers, distributors, and OEM manufacturers including Apple, Fujitsu, Toshiba, HP, Hitachi and NEC