Quantum lurches Starboard: Vigorous investor comes aboard

Tape-slinger invites 3 new directors to boardroom table


Blocks and Files Struggling storage biz Quantum has been in a quandary about how to react to aggressive shareholder Starboard Value.

Now the tape and disk data protection vendor has decided to play nice and invite three Starboard nominees onto its board.

It works like this: the board goes up from eight seats to nine. Jeffrey Smith, Starboard's CEO, gets one of them at once. Quantum nominates two Starboard-recommended people - Exar CEO Louis DiNardo and Imation-acquired Nexsan CEO Philip Black - for election to its board at the 2013 AGM, replacing two incumbents. So Starboard, owning around 17 per cent of Quantum's stock, gets a third of the board seats.

Quantum's CEO Jon Gacek said: "We look forward to drawing on the experience and perspectives that Jeff, Lou and Phil each bring to the board as we focus on driving growth and profit by building on our leadership in data protection and Big Data management.”

Quantum is also nominating Gregg Powers, the CEO of Private Capital Management (PCM), to its board at the AGM. PCM owns about 8 per cent of Quantum's common stock and is said to be a long-term shareholder.

Powers provided a canned quote about this: "I have long known the company and believe that the pieces are in place to substantially enhance shareholder value. I look forward to working with management and the rest of the board to help the company fully capitalise on its many market opportunities and create value for all of Quantum’s stakeholders.”

That's four new board members, with Powers possibly there to counter-balance Starboard. How can the re-jigged board, assuming the three nominees are elected at the AGM, enhance shareholder value by "building on [Quantum's] leadership in data protection and Big Data management"?

El Reg's storage desk believes that Quantum could become profitable if it were to lay off a lot of people and severely shrink its tape library product range, but such actions may effectively end Quantum's tape business as other suppliers attack its base.

The result could be a much smaller company overall making smaller revenues, which wouldn't surely appeal to Starboard Value.

Can the refreshed board turn Quantum into a lean, mean profits-generating machine by improving business execution and product packaging, or will it decide that bits of Quantum, or Quantum in its entirety, can be better run elsewhere and sell them off?

We'll probably have to wait until after Quantum's AGM, which will most likely be held in August like the 2012 AGM, to find out which way the new board's thinking is going. ®


Other stories you might like

  • Cheers ransomware hits VMware ESXi systems
    Now we can say extortionware has jumped the shark

    Another ransomware strain is targeting VMware ESXi servers, which have been the focus of extortionists and other miscreants in recent months.

    ESXi, a bare-metal hypervisor used by a broad range of organizations throughout the world, has become the target of such ransomware families as LockBit, Hive, and RansomEXX. The ubiquitous use of the technology, and the size of some companies that use it has made it an efficient way for crooks to infect large numbers of virtualized systems and connected devices and equipment, according to researchers with Trend Micro.

    "ESXi is widely used in enterprise settings for server virtualization," Trend Micro noted in a write-up this week. "It is therefore a popular target for ransomware attacks … Compromising ESXi servers has been a scheme used by some notorious cybercriminal groups because it is a means to swiftly spread the ransomware to many devices."

    Continue reading
  • Twitter founder Dorsey beats hasty retweet from the board
    As shareholders sue the social network amid Elon Musk's takeover scramble

    Twitter has officially entered the post-Dorsey age: its founder and two-time CEO's board term expired Wednesday, marking the first time the social media company hasn't had him around in some capacity.

    Jack Dorsey announced his resignation as Twitter chief exec in November 2021, and passed the baton to Parag Agrawal while remaining on the board. Now that board term has ended, and Dorsey has stepped down as expected. Agrawal has taken Dorsey's board seat; Salesforce co-CEO Bret Taylor has assumed the role of Twitter's board chair. 

    In his resignation announcement, Dorsey – who co-founded and is CEO of Block (formerly Square) – said having founders leading the companies they created can be severely limiting for an organization and can serve as a single point of failure. "I believe it's critical a company can stand on its own, free of its founder's influence or direction," Dorsey said. He didn't respond to a request for further comment today. 

    Continue reading
  • Snowflake stock drops as some top customers cut usage
    You might say its valuation is melting away

    IPO darling Snowflake's share price took a beating in an already bearish market for tech stocks after filing weaker than expected financial guidance amid a slowdown in orders from some of its largest customers.

    For its first quarter of fiscal 2023, ended April 30, Snowflake's revenue grew 85 percent year-on-year to $422.4 million. The company made an operating loss of $188.8 million, albeit down from $205.6 million a year ago.

    Although surpassing revenue expectations, the cloud-based data warehousing business saw its valuation tumble 16 percent in extended trading on Wednesday. Its stock price dived from $133 apiece to $117 in after-hours trading, and today is cruising back at $127. That stumble arrived amid a general tech stock sell-off some observers said was overdue.

    Continue reading

Biting the hand that feeds IT © 1998–2022