Storage firms take over rivals

Emulex snaps up Sierra Logic, Tandberg Data buys troubled vendor Exabyte

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By  Published  September 8, 2006

The storage market saw more consolidation with Emulex acquiring enterprise storage systems component maker Sierra Logic for US$180million and digital tape manufacturer Tandberg Data buying data storage firm Exabyte for US$28million.

Exabyte will be breathing a sigh of relief. In June the US firm, which manufactures tape drives and tape libraries, put itself up for sale following the resignation of its CEO and founder Juan Rodriquez.

Exabyte has been plagued with financial problems for some time — posting financial losses six years running — and saw total revenue for its 2006 first fiscal quarter drop US$3million to US$21.6million compared to the same period last year.

The vendor’s stock market value has plummeted in the last two years from a high of US$15 a share in 2004 to below US0.15 following the June announcement.

“The complimentary strengths of the two companies in the various geographic markets around the world will result in a truly global competitor in the storage industry,” stated Tom Ward, CEO of Exabyte.

“In addition, the combined product portfolios of the two companies will provide our customers with the full range of state-of-the-art, cost effective products and technologies to meet their needs,” Ward added.

Exabyte said it intends to liquidate and dissolve immediately after the closing of the transaction. It is not expected that there will be any assets available for distribution to holders of the firm’s stock.

Buying Exabyte will give Norway-based Tandberg a good foothold in the US market and has been seen as a good move by industry analysts.

Emulex’s move to buy US firm Sierra Logic has also been viewed favourably by the industry. The deal will expand Emulex’s position in the market for embedded multi-protocol storage products and builds on its previous acquisition of embedded switch supplier Vixel.

“The expansion of our embedded product portfolio also provides incremental revenue opportunities and we believe extends Emulex’s addressable market for embedded storage components to more than US$800million, and the company’s total available market to US$2.7 billion by 2009,” said Paul Folino, chairman and CEO of Emulex.

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