Quantum's revenue run rate has been in free fall over the past several years, while their balance sheet has ballooned into one big IOU. This preceded the bad economy; even while Sun and IBM tape revenues were growing, Quantum tape was being voted off the island. With the loan last week, they're officially on EMC's life support. If they were going to acquire Quantum whole, they would have already done so. It is also a poorly kept secret that EMC has their own designs on this technology and only has a temporary need for Quantum to stay around. One can imagine why it worked out this way, but evidently EMC just wants some assets, not the company or the people.
Why customers would directly place their trust in such a vendor is a mystery. Think of other tech companies that have gone into years of chronic reverse. How many turn around? Their layoff history doesn't bode well for future products and ongoing support. EMC (and later Dell) will functionally replace Quantum's channel as customers hope for a supportable product experience, hiding the weakened brand, but even that is still to come. As with other former high tech stars, Quantum has a rich history, but that's not helpful anymore. They have to spend more time on how they are keeping creditors at bay than on how they're building markets.
Unlike the US Treasury with GM, where there's no long term plan to keep the assets, this is not really a bailout; it's something else. There is a critical choice facing bloggers. Which metaphor should be applied?
A. In financial terms, Quantum is a zombie.
B. They are cutting off one limb after another and trying to regain momentum. It reminds me of the Black Knight in Monty Python's Holy Grail.
C. EMC can prop up this regime as long as it suits theirneed to gain access to the resource it wants. Quantum is EMC's banana republic.
D. From the outside, it looks like slow organ harvesting.
You're pretty funny for a suit :)
Posted by: Grant | 05/12/2010 at 11:08 AM