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May 17, 2010
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Quantum is a leading global storage company specializing in backup, recovery and archive. The company offers a comprehensive, integrated range of disk, tape and software solutions and works closely with a broad network of resellers, OEMs and other suppliers to meet customers' data protection needs.
During the quarter, Quantum total revenue decreased 2.2% to $164.5 million from $168.1 million in the prior-year quarter. The modest growth was primarily driven by an 8.8% year-over-year increase in royalty revenues to $17.7 million. However, overall revenue growth was partially offset by a 3.4% and 3.1% decline in product and service revenue to $108.0 million and $38.8 million, respectively.
Quantum’s adjusted gross margin rose by 560 basis points (bps) in the quarter to 45.7% due to a shift in the mix towards higher margin products and management initiatives to improve manufacturing and service efficiency. Total operating expenses, as a percentage of sales, dipped by 90 bps year-over-year to 39.0% primarily due to reduced headcount and lower restructuring charges. Accordingly, the company swung to an operating income of $2.9 million from an operating loss of $6.3 million in the year-ago period.
Moving forward, Quantum anticipates total revenue of $700 million to $750 million in fiscal 2011 and adjusted gross margin of 45% to 47%. For the first quarter of fiscal 2011, the company expects revenue of $170 million to $180 million and slightly higher gross margin compared to the fourth quarter of fiscal 2010. The Zacks Consensus Estimate on Quantum’s earnings for fiscal 2011 is currently pegged at 23 cents per share, which has remained constant.
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