Quantum Reorg Carves Off 110

Hundreds of Quantum Corp. (NYSE: DSS) employees are giving thanks this week that they still have jobs, after the tape vendor said today it will combine its two business groups to cut operational expenses and improve efficiencies (see Quantum Restructures, Lays Off 110).

The San Jose, Calif., company will merge its DLTtape Group (DLTG) and Storage Solutions Group (SSG) to consolidate operations functions, including sales. Quantum will subsequently have three business units -- Storage Devices, Media, and Storage Systems -- and two sales forces, focused on OEM sales and Quantum-branded sales.

As a result of the restructuring, Quantum says it will lay off 110 employees, or roughly 5 percent of its workforce, and eliminate 20 contract worker positions. The company says it expects to incur charges related to the current reorganization of between $10 million and $15 million over the next several quarters, with the majority being taken in the current quarter.

In September 2002, Quantum eliminated 900 jobs as it outsourced its Malaysian manufacturing operations to Jabil Circuit Inc. (NYSE: JBL) (see Quantum Splices Tape Unit and Quantum Details Restructuring Plans).

Among those getting the boot in the latest reorg is SSG president Larry Orecklin, who joined Quantum in 2001 from IBM Tivoli when Quantum originally formed the Storage Solutions Group (see Quantum's Systems Chief Gets Hungry and Quantum Forms New Group). Officially, Quantum says Orecklin "has chosen to leave the company to pursue other opportunities."John Gannon, president of the DLTtape group, has been named president and COO for the entire company, reporting to CEO Rick Belluzzo.

Quantum says integrating the two business groups will streamline its operations, cut out redundant job functions, and make it easier for customers and partners to do business with the company.

Also today, Quantum updated its guidance for the December 2003 quarter, with revenues to be roughly flat sequentially and operating expenses in the range of $78 million to $83 million. As a result, the company said it expects its net loss for the current quarter to be $0.14 to $0.17 per share.

The company has suffered steady losses and unexpected shortfalls in recent quarters, stung by falling tape media prices and accounting charges (see Quantum Pares Back Forecast, Quantum Seeks SDLT Salvation, Quantum Posts Q2 Net Loss, Quantum Puts Up Q1 Loss, and Quantum Posts $264M 2003 Loss).

Todd Spangler, US Editor, Byte and Switch