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Is Exabyte rising from the ashes?

Tape-maker Exabyte may be on the mend. The once-suffering company has restructured its business and may be back on track toward profitability.

Exabyte Corp., may have turned a corner in its quest to return to profitability.

The Boulder, Colo.-based tape-maker, which engineers and markets 8mm and MammothTape technology tape drives, VXA technology and storage media and libraries for, DLTtape and LTO Ultrium tape, reported its second consecutive quarter of improved financial results and a new reseller agreement with Toshiba America Information Systems Inc., Irvine, Calif.

Exabyte reported revenues for the first quarter of 2002 were $36.6 million compared to $35.7 million in the previous quarter. The results represent the second consecutive quarter of revenue growth. Net loss for the quarter was $14.1 million versus $8.8 million in the prior quarter.

The earnings may be minor, but the company's restructuring effort has impacted its bottom line. Exabyte paid special charges totaling $7.8 million comprised of $5.5 million in restructuring charges and other write-offs related to the announced closure of foreign facilities and general downsizing of the company.

Also included are inventory and tooling write-offs of $3.5 million related to changes in the company's announced product roadmap.

"The restructuring plan we began 12 weeks ago is already contributing to our bottom line," said Juan Rodriguez, Exabyte's president and CEO in a conference call. "We remain focused on execution of our plan and the streamlining of the Company for the next two quarters. The bulk of the benefit from this restructuring will be realized by the end of the second quarter with some further improvement in our third quarter.

Rodriguez, who was formerly the CEO of Ecrix Corp., and replaced Exabyte's Bill Marriner after the two companies merged, said the company is well on its way to profitability in the third quarter this year.

The Company is also considering a private equity funding of up to $5 million through a Series I Preferred Stock offering.

Also good news for Exabyte is the new third party add-on agreement with Toshiba's Computer Systems Group (CSG) in which Exabyte VXA-1 tape drives will be offered as a storage device with Dantz Retrospect Backup Software on Toshiba's Magnia line of servers.

The Magnia server line ranges from entry-level servers to enterprise servers.

The Exabyte drives will be sold through Toshiba, with both SCSI and IDE interface versions of the VXA-1 tape drive on certain servers in its Magnia product line.

Freeman Reports president and storage analyst Bob Abraham said Exabyte seems to have turned a corner and left its management and financial troubles behind.

"Their earnings would have been even better if it weren't for the [restructuring] charges, but all that's out of the way," said Abraham.

Abraham added that the company can build its business back up based on its VXA and Mammoth tape technologies, both of which are strong formats and contenders in the 8mm tape market.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor


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