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Quantum stumbles at closing time

Add Quantum to the list of storage vendors that struggled last quarter.

Quantum Thursday reported revenue of revenue of $110.9 million, down around $17 million from last year and below its original forecast. The company lost $10.1 million, down from a loss of $4.3 million last year. The declines were especially sharp in Quantum’s core tape business.

Quantum CEO Jon Gacek said organizations seemed reluctant to buy, and Quantum refused to give deep discounts at the end of the quarter to close deals.

“The overall storage environment was particularly challenging at the end of the quarter as customers seemed to pull back on purchases,” Gacek said. “I’m not willing to panic and do dumb things [to make sales].”

The challenges are expected to continue this quarter. Quantum’s forecast for the quarter of between $120 million and $130 million is an increase from this quarter, but down from last year when the vendor had $135 million in the same quarter.

“I’m not confident that the market is going to bounce back,” Gacek said, “although I do feel better about how [this quarter] has started. It just feels choppy to me.”

Quantum did not give guidance for the entire fiscal year, which started last quarter.

Gacek sees a silver lining in what Quantum calls scale-out storage, which is primarily its StorNext file system, Lattus object storage and new Artico NAS archiving appliance. Those products grew 54 percent year-over-year to $28 million, a hike of around $10 million, due to strong sales in media and entertainment and video surveillance. But disk backup revenue was flat at $17.3 million and tape revenue fell about $28 million.

Because the tape revenue is still the majority of Quantum’s business, it can’t grow overall by increasing scale-out if tape keeps slipping. The previous quarter, Quantum beat expectations when tape sales stabilized and DXi disk backup and scale-out storage increased.

“I like how we’re positioned in scale-out, and there is a lot of opportunity there,” Gacek said. “I would like to be more confident in the data center stuff.”

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