GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Imation Banking on Tiered Storage Market

August 25, 2014 | About:



Digital data is exponentially increasing creating enormous demand for data storage solutions. Between the digitization of historical content and the brisk creation of new files, data storage is running at limit for many companies, and we realize that the growth is not easing off whenever soon. The test is that the measure of digital data that needs to be put away far surpasses the capacities of single-layered storage architectures. Layered data storage has rapidly turned into superlative storage practice, quickened by the utilization of solid state storage. Various storage companies are now focused on this market which is now in transition from single layered storage to multi-tiered storage solutions. Imation (IMN), is one such organization which eyes this market strongly. Imation primarily have two business segment that contributes to it consolidated revenue, Consumer Storage and Accessories or CSA segment and Tiered Storage and Security Solutions or TSS.

Earning results

In the beginning of this month, Imation posted second quarter results which were satisfactory. Consolidated revenue in Q2 was $178.6 million, which was down 15.6% from the second quarter of 2013 but flat with Q1 of this year.

It is satisfying to realize that the key Imation Storage Solutions investment made in sales, product and service support and product improvements prompted sequential income growth for the Nexsan product offering in all geographic districts. For instance, it has now stretched its channel accomplices by 25% and focus on product development for hybrid storage solution, which is a growth oriented market within data storage.

Technology enhancement & new products will strengthen product portfolio.

Imation as of late advertised that it released 6TB solid state drives with its Nexsan E-Series of data storage solution. Through E-Series, clients now can pack more than 1PB of capacity limit into 12 rack units and more than 3.5pb into a standard rack, attaining another level of storage density and capacity customization in their data storage architecture.

Besides, the organization expanded its high end security technology to serve the needs of higher volumes of users and various organizations as well. Clients can arrange these drives with Microsoft and Mac working frameworks, which will again give further, and provide new growth opportunities as these are the real working frameworks being used.

In CSA segment, the focus lies around creating higher margin products to influence the bottom line. Imation unwrapped the new TDK Life on Record™ TREK remote speaker in the second quarter. Income in the Audio and Accessories class grew 10% over a year ago, with the TREK product offering making solid commitment; the company anticipates that it will leverage top and bottom line, in future.

Research & Development

Imation is presently assigning higher budget for various R&D projects, as we notice R&D costs in Q2 2014 were $4.5 million, up somewhat from $4.3 million in Q2 2013, which reflects the Company's expanded financing for higher-margin ventures in TSS, in part balance by a decrease in legacy R&D expenditure.

Journey ahead

With the point of upgrading its revenue and piece of the pie in the flash and hard drive business, Imation stretched its Ironkey product offering with new secure USB flash and external hard disk drives. The Ironkey D80 flash drives and H80 hard drives are alter safe and scrambled with solid authentication, which empower the client to keep information secured. The constant interest for information security from government, defense, and pharmaceutical organizations, offers revenue growth opportunities to Imation.

The storage business is appealing, since it is developing at more than 20% every year and is anticipated to acquire 45% of external storage market by 2017. Imation’s NST line utilizes an architecture that enhances flash technologies for caching and storage execution. NST is increasing Imation’s business arrive at into the server farm by tending to blended application workloads cost viably and in an adaptable manner.


The company might have witnessed decline on year over year basis, but sequentially it has recorded growth which seems to be a good sign of rebound. It has been focused on R&D and new product released, this again will leverage its revenue in future to record growth over the past.

The company also safeguards investor’s money with its repurchase programs. It repurchased $900,000 worth of Imation’s common shares during Q2 and the authorized buyback up to $2.9 million additional shares.

Imation is also focused to monetize the property in a physically responsible manner, this is exemplified by its strategic move of disposing its Campus headquarter building, and money received can be used for various growth plans.

Looking at some of this factual information, I feel Imation can be a good buy.

Rating: 0.0/5 (0 votes)


Please leave your comment:

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial