Quantum restructures, acquires Benchmark

By Heidi Biggar

Earlier this week, Quantum announced a major restructuring effort with the hope of steering the company toward profitability by the end of its fiscal year. The news comes just a week after Quantum announced plans to acquire Benchmark Storage Innovations, a vendor of low-cost DLTtape drives.

Quantum, which licensed technology to Benchmark several years ago, currently has a 20% investment interest in Benchmark. The acquisition is a stock/cash deal valued at nearly $55 million.

Quantum's restructuring will reportedly occur in two phases over the new two quarters and will affect its business groups (i.e., its DLTtape Group and Storage Solutions Group) and corporate functions. The company expects to eliminate about 1,100 jobs in the first phase.

Quantum officials expect the actions to translate into as much as a 20% reduction in pro forma operating expenses by March 30, 2003, by improving efficiencies by outsourcing manufacturing to Jabil Circuit--Quantum's largest supplier of components and electronics--and by strengthening the DLTtape platform by extending its reach into low-end markets where Benchmark plays.

"A key part of our strategy is to strengthen our tape business for the long term," says Andy Grolnick, vice president of marketing, DLTtape. "We're better off together than separate. We can come up with a more coordinated road map and leverage each other's efficiencies."

The company plans to further reduce costs by consolidating development sites for its disk-based backup and tape automation efforts and by centralizing support functions.

Quantum will begin integrating Benchmark's ValuSmart line of tape drives, media, and autoloaders into the larger DLTtape family and its storage solutions group soon after the deal's anticipated close in the fourth quarter. The company plans to maintain Benchmark's facility in Boulder, CO, but will likely eliminate jobs as the two workforces are combined.

Quantum has 3,100 employees worldwide, with the bulk of those located at its corporate headquarters in Milpitas, CA. Benchmark has 120 employees and is based in Boulder. Benchmark outsources its manufacturing to Mitsumi Electric and Beyonics Technology.

Benchmark claims to have shipped more than 200,000 drives since its launch in 1999.

This article was originally published on September 10, 2002