Exabyte Closes the Books on 2003

You can understand if the people at Exabyte Corp. (Nasdaq: EXBT) celebrate the passing of 2003. The Boulder, Colo.-based tape vendor had a miserable year, detailed in their annual report issued today.

Exabyte announced a $43 million net loss for the year on revenue of $95.8 million, after losing $5.8 million on $25.9 million in revenue for the fourth quarter (see Exabyte Loses $43M). Those numbers dont even come close to depicting just how bad the year was. Exabyte entered 2003 with no working capital, got delisted from Nasdaq when its stock price dipped below $1, and took a $6 million hit when its biggest customer, Digital Storage Inc., filed for Chapter 7 asset liquidation. Exabyte survived only by acquiring $26 million in loans from five of its vendors and selling its products’ distribution rights to Imation Corp. for $20 million (see Imation Bites Off Exabyte's Media Bits).

Exabyte CEO Tom Ward said 2003 was a “restart year.” He’s no doubt relieved it wasn’t a total "stop" year.

“We entered the year with zero working capital,” Ward said on a conference call. “A lot of our vendors put us on a ‘stop ship.’ We’ve overcome that, but it set us back.”

Ward says he hopes Exabyte can climb out of its financial hole through sales of its XVA tape cartridges, which reported two successive quarters of 50 percent growth. Exabyte lined up 10 OEMS last year for its XVA-2 tape drive, including deals with IBM Corp. (NYSE: IBM) and Fujitsu Siemens Computers (see IBM Offers Exabyte VXA-2 in Servers and Exabyte Wins Fujitsu Siemens OEM). The company’s fourth-quarter revenue rose 5.4 percent sequentially and it cut its working capital deficit from $16 million to $6.3 million, thanks to the Imation deal. It also revamped its management team (see Exabyte Expands Management Team, Exabyte Replaces CFO, and Exabyte Hires Supply Chain VP).Yet it still has a looong way to go. Exabyte’s plan calls for it to repay $12 million to $13 million of its obligation to its suppliers this year, and it might have to seek equity funding to do so.

“We have to finalize some things before we win the war, but we feel like we’re winning some battles,” Ward says. “We feel that we’ve got our financial house very much in order.”

Exabyte reduced operating expenses by $6.3 million last year, largely through lease terminations and outsourcing production and product service. Ward says he sees little room for further cuts. Only increased revenue can stem the red tide.

“Our number one goal for 2004 is to get this place profitable,” says Ward. “It’s a lot more fun running a profitable company.”

That'd put Exabyte about $43 million shy of becoming a real fun bunch.— Dave Raffo, Senior Editor, Byte and Switch