Does Quantum Still Matter?

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"Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway."
-- Computer Networks by Andrew S. Tanenbaum, 2003

Yes indeed, backup tapes still matter even in this age of gigantic hard drives and cloud storage. Just ask tape storage specialist Quantum (NYS: QTM) . The company just reported fourth-quarter results with just about breakeven non-GAAP profits on $160 million in revenue. The industry at large and Quantum itself are moving toward disk-based systems, but Quantum is still coming up with new tape products because the market is still there.

These results were not particularly inspiring, and Quantum's shares ended up sinking 3% the next trading day. However, management can see an end to sliding sales and expects to actually start growing again in the just-started fiscal year.


Tape sales in the fourth quarter swooned 12% year over year to just $54.4 million and are not expected to turn around, so that growth would clearly have to come from disk systems and data management software. Those divisions are actually on quite a tear these days: The DXi line of disk-based backup solutions grew 26% and branded software sales were up 31%.

Keeping that growth up won't be slam-dunk easy, of course. Part of the problem is that storage giant EMC (NYS: EMC) used to be a huge software customer, but has started rolling its own data deduplication solutions instead. I mean, you don't spend $2.1 billion on a deduplication buyout if you don't mean to use the products you just bought.

But the big data market is big enough for several very large product suppliers. Data mining, digital video, and business intelligence are some of the smoking-hot buzzwords driving the need for smart management of huge data sets. The Fool has created a special report on big data. To find out how Quantum fits into this brave new world, not to mention the one stock you need to know in the big data space, you can grab your copy totally free right now.

At the time this article was published Fool contributorAnders Bylundholds no position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+.The Motley Fool owns shares of EMC. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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