StorageTek's Martin: Channel Business Is Down, Measures Put In Place

Patrick Martin, chairman, president and CEO of the Louisville, Colo.-based tape library vendor, told CRN this week that while its OEM business seems to be doing well, its channel business needs some attention.

Martin said about 42 percent of the company's revenue comes from sales through the channel, down from about 49 percent the year before. "There seems to be some inactivity in the channel," he said. "I'm not sure why."

Early this year, StorageTek put in place deal-registration and other programs for the channel and is redoubling its support for solution providers, said Martin. During the past quarter, the company revamped its telemarketing lead-generation organization so that it provides support to indirect channels only, and as the company's new SL500 midrange tape library ramps up in production, it will mean more opportunities for solution providers, he said.

StorageTek on Tuesday reported revenue that didn't meet analysts's expectations.

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StorageTek executives said revenue for the company's second quarter of 2004, which ended June 25, was $516.6 million, down from the $527.3 million recorded a year ago.

The revenue figure was also down from the $549 million expected by analysts earlier in the quarter. The company, citing an unexpected slowdown in orders, warned on July 8 that revenue would probably be in the range of $510 million to $520 million.

Even so, earnings for the quarter hit $35.6 million, or 32 cents per share, compared with $30.1 million, or 27 cents per share, a year ago.

While revenue for disk-based products rose to $46 million in the quarter vs. $42 million last year, StorageTek's tape business fell about 9 percent to $215 million.

Martin said that overall the quarter was a good one. "We had a very strong profit performance," he said. "We made the profit guidance we gave to the street. If we had met our revenue guidance, it would have been gangbusters."