Ailing tape systems vendor Exabyte Corp. (Nasdaq: EXBT) -- looking to stop the bleeding on its balance sheet -- announced a deal today making Imation Corp. (NYSE: IMN) the exclusive distributor of Exabyte's media products.
As part of the agreement, Imation will make an investment in Exabyte representing less than 5 percent of its total equity. The companies say the total dollar value of the transaction, when fully completed, is $20 million, the majority of which is for distribution rights.
For Exabyte, the deal was done primarily to give the Boulder, Colo.-based company an infusion of hot cash, says CEO and president Tom Ward. "This agreement adds $20 million to the balance sheet and puts us in good financial health," he says.
Still, it doesn't erase the fact that Exabyte remains unprofitable -- it posted revenues of $24.5 million and a net loss of $12.6 million for the third quarter of 2003. And by itself, the deal with Imation isn't likely to turn the tide, particularly as the price of tape cartridges continues to drop.
But the cash from the Imation deal does give Exabyte a bit more breathing room: It reported having just $170,000 in cash on hand at the end of the September quarter.
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