Quantum Corp. (NYSE: DSS) has made a few graceless stumbles in the first half of the year. Some of those missteps have to do with the current slowdown in IT spending, but Quantum's main problem has been botched forecasting: For the past two quarters, the company has warned that it will miss its projected quarterly revenues (see Quantum Sees Huge Miss, Cuts Staff and Quantum Sees Another Bad Quarter).
Michael Brown, Quantum's chairman and CEO, says these shortfalls are hiccups in an otherwise solid business. For the first three months of the year, Quantum posted revenues of $242.6 million and a net loss of $21.2 million -- sales that were lower than expected because it was coming off an unusual spike in media sales in the last quarter of 2001, according to Brown. The quarter that ended June 30, meanwhile, was off because of a forecasting error by a key OEM partner, he says.
"The reaction from Wall Street, any time you preannounce, is terrible," he says. "But we think it's exaggerated. Nothing changed fundamentally in the business. Nothing changed in terms of product lines."
But investors don't like surprises, and Wall Street's faith in the company has been rattled. Quantum's stock price has dropped from $8 at the beginning of April 2002 to close at $3.85 today. A quantum leap downward, so to speak: The company has lost half its value in about three months. Yowch.
Now Quantum is trying to dig itself out of the hole, and a big part of its rebound strategy is to increase sales of its networked storage products and services. In other words, it's looking to expand its lines of business not related to tape drives or media.
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