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In 1998 the data storage industry started showing rapid growth as the Internet and other factors drove up data storage demands exponentially. This $100 million manufacturer of IBM storage technologies, primarily media, had recently experienced a significant slowdown in sales growth. The parent company was a $420 million California-based document imaging and data storage company that was looking to divest the division for cash to invest in its core growth strategy of providing document management services through the Internet.
With mature product segments across the board and no cash to invest in the newer storage technologies, the division attracted no buyers and appeared to have little choice but sunset its products and try to optimize profitability as it rode the curve down.
However, senior management recognized that the division's customer base of approximately 10,000 was quite rich and included many of the Global 1000, especially in the financial vertical of insurance, banking and investing. In addition, the company contained hidden assets in the experience of its 400-plus employees, of whom many had been in the storage business for decades and had accumulated highly saleable knowledge about solving data center problems related to storage.
The division recruited a new VP of Marketing with turnaround experience and set to work transforming itself from a storage media manufacturer to a storage services provider. Focusing on services and software, the company launched new services in data migration, data conversion and disaster recovery. In addition it also launched related software and integrated systems for companies to provide their own data services. First year sales were $5.7 million and 18 months after the turnaround was started, the division was sold to a group of private investors who saw strategic fit with their portfolio.
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Principal Contact: Mike Harris
Direct Telephone: 858-481-8665
Fax: 858-605-6682
mike.harris@harconllc.com |
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