Imation ejects its removable disk biz, hands it to Sphere 3D

Steal of a deal, but it's not quite plain sailing for the vendor

With an echo back to its prior Overland Storage data protection days, Sphere 3D has bought Imation’s RDX removable disk storage business.

RDX is a removable disk (well, duh – Ed.) cartridge with up to 2TB capacity intended for use as a tape replacement in off-system/off-site backup. The drives fit into QuikStor and QuikStation appliances which are hooked up to servers.

Tandberg bought the founding ProStor company way back when, actually in 2011.

ProStor had licensed manufacturing and market rights to Tandberg earlier, and also to Imation, as well as doing a deal with Quantum in 2010. RDX kit is no longer mentioned on Quantum’s website.

Overland Storage bought Tandberg Data in January 2014.

Now Sphere 3D, with whom Overland merged in 2014 and which has Overland Storage as a wholly-owned subsidiary, has bought the RDX business and existing inventory assets from Imation for a paltry $4.9m plus the net value of existing inventory of approximately $1.4m in shares. That’s a $6.3m all-share deal, with Imation not getting a penny in cash.

Paltry we say, because the RDX “product lines generated approximately $14.5m of revenue for Imation in the trailing twelve months as of June 30, 2015".

Send Imation to negotiating school at once; it looks like a steal. But perhaps it was a loss-making business.

Sphere_3D_Revenues_to_Q2_2015

Overland Storage/Sphere 3D revenues and net income to Q2 2015. Click chart for larger version.

Separately Sphere3D reported its second 2015 quarter results – chart above – with revenues of $18.4m, which it says, compares with $1.5m for the second quarter of 2014.

So it does, for Sphere 3D which then did not own Overland. If we compare it to Overland’s year-ago quarter, then its revenues were $10.6m, meaning a 74 per cent improvement, which is great.

However, that is not the pattern with Overland’s sustained multi-quarter, multi-year loss-making habit, as we see a $8.9m loss, comparing badly to Overland’s $4.3m loss a year ago. The recent downwards quarterly revenue trend is concerning, too.

There’s still a lot of work for Sphere 3D CEO Eric Kelly, formerly Overland’s CEO, and his team to do. ®

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