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Iron Mountain changes CEOs

After 27 years, Richard Reese will step down as CEO to focus on integrating Iron Mountain's many business units, while Bob Brennan takes over the company's top spot.

Iron Mountain Corp.'s chief executive Richard Reese will step aside this June after 27 years of leading the company he founded, making way for a hand-picked successor, chief operating officer Bob Brennan.

Although he'll hand over day-to-day operations to Brennan, Reese will continue with Iron Mountain in a strategic advisory role as executive chairman, the two said Thursday on a company earnings call.

Reese, 61, said on the call that he wanted someone younger to take on the CEO role. But he also said he'll be working on new projects of his own. "I'm still a full-time employee here," he said. "I'm not leaving until they kick me out."

Brennan, 47, later told that Reese's main project will be integrating Iron Mountain's many business units. Several of those units were added in the past year due to acquisitions in the records management and e-discovery space, including the $158 million acquisition of Stratify Inc. in October.

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Analysts and customers are watching Iron Mountain's integration plans. Forrester Research analyst Barry Murphy said in a recent set of reports that Iron Mountain has a finite amount of time to prove it can organize its product lines and compete in the digital world.

"It's something our customers have also been urging us to do," Brennan said. "They're saying to us, 'you have all the pieces -- now put them together.' " While Brennan said customers should start to see "tangible evidence" of that integration work by the end of 2008, he added that the full results will be realized over the next five to 10 years.

Brennan came to Iron Mountain via acquisition. He was CEO of archiving startup Connected Corp. when Iron Mountain acquired Connected Corp. for $117 million in 2004. After a year as Iron Mountain's president of North America, he became president and chief operating officer of the company in late 2005.

Reese to help make Stratify fit

Brennan said Reese's role will be one of "uber product management," working on questions, such as how Stratify fits in with the Safekeeper Plus physical records storage business. "It's a question we don't spend enough time on today," Brennan admitted.

The Forrester report also suggested that hosted message archiving will be an uphill battle for all the players in the market, as Murphy's research showed the majority of archiving deployments outside of high-end financial institutions are on-premise at customer sites. "We start at the top of the market and work our way down," Brennan said. " We believe that there's been a harbinger at the high end of what's coming."

Enterprise Strategy Group analyst Brian Babineau said the CEO change wasn't unexpected, given Reese's age and the way he likes to work. "Richard likes to meet with customers," Babineau said, adding that most of Reese's ideas about the business have come from those meetings, such as the Stratify acquisition and digital archiving business. "My sense is he'll continue to meet with customers and follow up on more of those ideas."

Iron Mountain's revenues for the fourth quarter were up 19% year over year, from $610 million in the fourth quarter of 2006 to $727 million in 2007. For the year, revenues increased to $2.73 billion, up 16% compared to $2.35 billion in 2006. The digital business unit accounted for the smallest proportion of quarterly revenues, at $45 million, compared to $497 million in North American physical business sales. The digital business unit also showed the smallest growth year over year, at 14% among the three main business units. Counting international sales, the physical unit grew most at 19% year over year.

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