Imation, the Oakdale, Minn.-based provider of data storage systems, this week announced that it was closing its non-European tape media and consumer storage businesses. The move is part of strategy to refocus the company’s efforts on its enterprise storage and security units, according to Imation’s interim president, Barry L. Kasoff.
“After careful consideration, we concluded these wind downs are critical in our ongoing effort to create a leaner, more focused Imation,” he said in a Sept. 28 announcement. “Our TSS [Tiered Storage and Security Solutions] segment is the foundation for the company’s profitable growth over the long term.”
Apart from its enterprise data storage unit, Nexan, Imation also currently offers a portfolio of tape media, including LTO tape, SATA-compatible RDX storage and over Digital Linear Tape (DLT)/Super DLT. Its consumer division offers flash drives, memory cards along with an assortment of external hard drives and solid-state drives (SSDs).
Joseph A. De Perio, non-executive chairman of the board for Imation, signaled a more business-friendly direction for the company.
“The steps we are taking today are important milestones in our efforts to reestablish Imation as a more competitive company that is well-positioned for growth and success,” he said. “Exiting certain legacy businesses will improve our near-term financial performance and position the Company for profitable growth.”
Upon shedding those business units, a more “streamlined Imation will focus on the significant market opportunity for secure data-storage solutions, helping organizations worldwide safeguard high-value data while addressing scale, availability and performance requirements,” the company said in a statement. Explosive mobile adoption in the enterprise also presents an opportunity for the leaner IT provider.
“The company is also capitalizing on the strong demand for comprehensive solutions for securing the mobile workforce,” stated Imation.
As part of the restructuring, Imation is ending its licensing deal with TDK Corporation, which enabled the company to offer a line of TDK Life on Record audio products, including wireless speakers and headphones. TDK will transfer approximately 6.7 million shares of Imation back to the company in the fourth quarter.
Imation expects restructuring costs to settle somewhere in the $140 million to $160 million range. In 2016, the newly tape-less organization is expected to break even.
On Aug. 10, the company reported an operating loss of $15.9 million on $150.6 million in revenues. Presaging this week’s move, Imation’s CEO, Mark Lucas, said his company continues “to invest in our Tiered Storage and Security Solutions segment, which serves as the foundation for the company’s profitable growth over the long-term,” in a statement at the time.
“We continue to invest in our Tiered Storage and Security Solutions segment, which serves as the foundation for the Company’s profitable growth over the long-term,” he continued. “We are maintaining a focus on higher growth markets where we can bring our enterprise quality solutions to our small-to medium-sized business customers within key vertical markets.”