Quantum Corp. (NYSE:QTM) filed Quarterly Report for the period ended 2010-09-30.
Quantum Corp. has a market cap of $747 million; its shares were traded at around $3.49 with a P/E ratio of 16.5 and P/S ratio of 1. QTM is in the portfolios of Private Capital of Private Capital Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Total revenue for the second quarter of fiscal 2011 decreased $7.2 million to $167.7 million from $174.9 million in the second quarter of fiscal 2010, primarily reflecting the expected decline in revenue from OEM customers, with the largest revenue decreases from devices, OEM deduplication software and service. Partially offsetting these decreases, we had a 31% increase in branded disk systems and software solutions revenue in the second quarter of fiscal 2011 compared to the prior year period primarily due to increased StorNext software sales and sales of our midrange DXi-series disk products. Disk systems and software solutions increased to 16% of total revenue and to 24% of product revenue in the second quarter of fiscal 2011, up from 14% of total revenue and 21% of product revenue in the second quarter of fiscal 2010. For the second quarter of fiscal 2011, 80% of non-royalty revenue was branded, compared to 73% for the second quarter of fiscal 2010.
Operating expenses increased 1% to $62.3 million for the second quarter of fiscal 2011 from $61.7 million in the prior year primarily from increased sales and marketing expenses and investments in research and development, mostly offset by decreased restructuring expenses. Sales and marketing expenses increased due to expanding our sales force to increase branded product sales as well as increased advertising and marketing expenses related to channel engagement and our go-to-market efforts for new products. Research and development expense increased due to increased salaries and benefits from investing in our disk systems and software development teams to extend and improve our product portfolio.
Operating profit decreased $5.8 million to $9.1 million, resulting in a 5.4% operating margin for the second quarter of fiscal 2011 compared to an 8.5% operating margin for the second quarter of fiscal 2010. Interest expense decreased $0.9 million primarily due to prior year expense for an interest rate collar. We had net income of $3.0 million for the second quarter of fiscal 2011 compared to $11.4 million for the second quarter of fiscal 2010. Both operating margin and net income were largely impacted by the same factors that decreased gross margin compared to the prior year period. In addition, we generated $26.2 million of cash from operations in the second quarter of fiscal 2011. We ended the September 30, 2010 quarter with $98.0 million in cash, cash equivalents and restricted cash.
For the third quarter of fiscal 2011, we anticipate total revenue between $185 million and $200 million, a slightly higher gross margin rate than the second quarter of fiscal 2011, operating expenses of $64 million to $68 million, similar interest expense and tax expense as the second quarter of fiscal 2011 and diluted net income per share of $0.04 to $0.06. We are reconfirming our total revenue forecast for fiscal 2011, anticipating between $700 million and $750 million in total revenue. In addition, we continue to anticipate a modest increase in gross margin rates and decreased operating expenses for fiscal 2011 compared to fiscal 2010.
Our product revenue, which includes sales of our hardware and software products sold through both our Quantum branded and OEM channels, decreased $6.0 million and $2.8 million for the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010, respectively, primarily due to anticipated decreases in OEM sales, specifically revenue from devices and media as well as OEM deduplication software revenue. Revenue from sales of branded products increased 6% for both the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010.
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