Overland Storage optimistic despite HP loss
Overland Storage optimistic despite HP loss
Aug 04, 2005: Although Hewlett-Packard has decided to terminate its OEM relationship with Overland Storage, Overland is sees this as a chance to exploit new opportunities, especially the protected primary storage market.
HP will continue to purchase Overland's next-generation, mid-range tape automation products until July 2006, but Overland does not believe that this will have much impact on its revenue during its current fiscal year that ends on June 30th, 2006.
Christopher Calisi, the president and CEO of Overland Storage pointed to the positives, outlining that although the company's OEM business has declined in the last year, its branded business has grown by about 20 percent per year in each of the last two year and now represents almost US$100 million in annual revenue.
"In fiscal year 2006, this higher-margin channel will receive not only additional focus, but several new products to deliver to the marketplace through out worldwide network of distributors, direct marketers and VARs.
"Although we will have a lower revenue base due to the HP loss, we anticipate a significant increase in our profit margin percentage resulting from a higher concentration of branded sales."
He added that Overland has a strong balance sheet and cash position, and intends to use this strength to fill out its tiered storage strategy consisting of protected primary disk storage, secondary disk-based backup and tertiary tape automation devices.
"We intend to add a third storage product line that will allow Overland to enter the protected primary storage market, a market that is several times the size of the markets we currently address. For some time now, we have been evaluating potential software acquisitions. Our goal is to have, via acquisition, storage offering in market by the end of calendar 2005.
Calisi closed by saying that changes, such as the cessation of a long-standing relationship, present challenges that must be viewed as opportunities.
Related Article: