"What customers have said is that Exabyte's balance sheet isn't very strong -- they don't believe in our long-term viability," says Ward. The deal with Imation "ensures we will be viable for a long time in the future."
And at least one Wall Street analyst believes the agreement enhances Exabytes position in tape market. The deal "brings a new win to Imations portfolio and the opportunity to enhance Exabytes position in the market via Imations vast distribution channel," writes Kevin Hunt, an analyst with Thomas Weisel Partners. "Taking advantage of Imations distribution capabilities is a significant step for both companies as Exabyte attempts to gain traction in the SMB [small and medium-size business] market."
Exabyte has historically generated nearly half its sales from VXA tape cartridges. According to Ward, the company's media revenues have been between 40 percent and 48 percent of total revenues. For the nine months ending September 27, 2003, Exabyte reported $32 million in storage media revenues.
Under the terms of the agreement with Imation, Exabyte will sell all of its media products exclusively to Imation, which will manage the Exabyte media brand and provide sales, marketing, and distribution services for Exabyte media products worldwide.
Exabyte's VXA tape format is aimed at small and midsized server markets. OEMs of the VXA tape autoloader include IBM Corp. (NYSE: IBM), which offers VXA-2 Packet Drives for its eServer families.
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