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ANOTHER red-ink-spattered quarter for Overland Storage

Tandberg and Sphere3D deals offer hope after 18 bad ones

Comment Data manager Overland is still making losses (bigger ones more recently) with profitability like a mirage forever receding into the distance, despite having acquired Tandberg Data as a way of cutting its operating expenses and expanding its markets.

Revenues for its 2015 first fiscal quarter were $22.9m, double the $10.6m recorded a year ago and reflecting the addition of Tandberg-based revenues. The net loss was $7.3m, 59 per cent worse than the loss of $4.6m recorded a year ago and, no doubt, reflecting the addition of Tandberg metrics.

The prospect of a windfall from patent infringement lawsuits against BDT, PivotStor, Qualstar, Quantum, SpectraLogic, and Tandberg Data has also vanished.

The Tandberg component became moot when Overland acquired it. The others fell away with the International Trade Commission and the US Patent Office ruled that one of Overland's patent claims was negated by prior art, an IBM 3494 tape library that was installed inside Overland.

The chart below shows the gory red ink loss sequence in glorious technicolour detail.

Overland losses to Q1 fy2015

18 quarters of losses by Overland. Click to enlarge.

Now Overland has more or less conceded that this lawsuit is a failure, saying: "Overland Storage has successfully settled its infringement litigation related to this patent with all other parties."

A potential settlement of claims against it relating to the almost-complete take-over by Sphere3D is in prospect, and that's another irritant out of the way.

Cyrus Capital might be hoping it can finally exit from the entanglements it's in with Overland, being its majority shareholder, and Sphere3D when the acquisition completes. It was instrumental in helping Overland take over Tandberg with which it was also involved and has recently supplied Overland with $5m debt financing.

Sphere3D is Overland's last throw if the dice, surely. If that company, once it's taken over Overland, fails to generate a profit then it's surely game over.

The combined company will become a wholly owned subsidiary of Sphere3D, with the name of the combined company remaining Overland, according to reports.

You have to wonder how long Overland can keep doing its motorcyclist-on-the-wall-of-death impression. The speed is slowing, but somehow it's still up there, and you just have to admire the exec team for what it's trying to do.

Overland has got a little more fuel in the tank (Tandberg) and another refill is coming (Sphere3D), but can it keep going long enough to recover? That, as they say, is a question ... and at the moment, answer there is none. ®

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