for the record, i'm not posting this to be alarmist; as shareholders, it's just something i believe we should be aware of.
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Quantum to split common into two tracking stocks
March 1, 1999 09:13 AM
PALO ALTO, Calif., March 1 (Reuters) - Quantum Corp. (QNTM), a leading maker of computer disk drives and other storage devices, said on Monday that it plans to replace existing common stock with two separate tracking stocks to better value its fast-growing tape-drive business.
The new shares would separately track the performance of the storage systems business, which includes its DLT storage unit, and the hard disk drive business. Quantum would be the first Silicon Valley company to use tracking stocks.
If the plan were approved by shareholders, the holders would receive one-half share of the hard disk drive-based stock and one share of the storage systems-based stock for each share of existing Quantum common stock held. Quantum would continue to be one company with one board of directors and one senior management.
Tracking stocks are designed to allow the market to place a higher value on a division or unit of a company that is growing faster than the overall company, among other things.
Quantum is also to announce a big push into becoming the largest seller of so-called "smart" storage systems that will house the vast amounts of data that Web sites are churning out each day.
With the move, the Milpitas, Calif.-based company will be setting its sites on the turf of Network Appliance Inc. (NTAP), a fast-growing provider of devices that help store and manage network-stored data at Yahoo! Inc., Siemens AG , Cisco Systems Inc. (CSCO) and others.
As growth in Internet traffic and data continues to mushroom, companies with Web sites and vast networks need smarter ways of accessing and storing all of that information. Quantum is seeking to capitalize on that trend by expanding its focus from its traditional business as a device manufacturer.
Earlier this month, Quantum Chief Executive Michael Brown told investors at a conference in San Francisco that the rebound for computer disk drives showed no signs of slowing down and remains strong going into this year.
The industry is at last emerging from a six-quarter slump in which disk drive companies were mired in a glut of inventory and got whacked by the Asian economic crisis.
On Friday, Quantum stock closed down $1.63, at $16.44, amid a broad sell-off in technology stocks led by Compaq Computer Corp. The stock is up from a year-low of $10.81. |
