Exabyte Corp.'s long and winding road to financial stability reached an important milestone Monday, when the tape maker signed a $20 million deal with Imation Corp., giving Exabyte a healthy balance sheet and Imation exclusive rights to distribute VXA and Mammoth tape technologies.
Imation Corp., Oakdale, Minn., and Exabyte Corp., Boulder, Colo., announced an agreement that establishes Imation as the exclusive worldwide distributor of Exabyte media products. As part of the agreement, Imation made an equity investment in Exabyte. Under the agreement, Exabyte will sell all of its media products exclusively to Imation. Imation will manage the Exabyte brand and provide sales, marketing and distribution services for Exabyte media products worldwide, the companies said.
"The Imation investment clearly validates the VXA format, provides capital for future product development, and will help secure the VXA road map," said Tom Ward, Exabyte's president and CEO, in a conference call Monday. "We now have the financial strength and resources we need to take advantage of opportunities in the market."
Ward said the deal will aide Exabyte in its plans to replace outdated DDS technology with the up-and-coming VXA format.
Most important to Ward is the new cash on Exabyte's balance sheet. "As we've taken VXA technology and products associated with VXA into the marketplace, customers [haven't] believed in our long-term viability. That $20 million eliminates that question."
Exabyte said end users will hardly notice any difference in how they buy VXA and Mammoth tapes.
"We expect Exabyte media customers will experience little change in their business after a brief conversion period, during which we will transition customer accounts to Imation," added Bob Ariniello, Exabyte's vice president of media and team leader of the implementation plan. "Imation will use the same product part numbers previously used by Exabyte, which will help minimize the effort to switch sourcing to Imation."
Robert Amatruda, research manager for International Data Corp.'s storage program, said this deal does more than breathe new life into Exabyte. "In context, Imation might be dabbling in hardware sales as well," he said. "[This deal] could give Imation the ability to get back into the tape hardware marketplace."
Exabyte now benefits from exposure to Imation's worldwide distribution capabilities in Latin America, Europe and Asia. Imation will be equipped to take orders from U.S. distributors for Exabyte media, beginning Nov. 17, 2003, with a full transition expected to be complete by end of the year.
In May, Exabyte strengthened its ties with IBM by extending an OEM agreement under which VXA-2 drives are offered as an optional internal storage component for IBM's eServer xSeries line of Intel processor-based servers.
Exabyte acquired its VXA technology when it merged with Boulder, Colo.-based Ecrix Corp.
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