Imation looks for Aquisitions
- Is ProStor a Target?
Buying into Growth Storage Markets, could this potentially be
Imation's new strategy?
CEO and president Mark Lucas wants
double-digit growth in 2012 and overall top-line growth from then on. It won't
get it by getting more profit from its declining businesses and so it has to go
into new areas. The only growth business Imation has at first glance is in
removable hard drives – however Tandberg Data is currently a more relevant
player in the ProStor
Imation says it plans to invest in
four core product technology areas: secure storage, scalable storage,
Wireless/connectivity, and magnetic tape. But this doesn't mean these are are
the growth areas. For example, Imation has just got out of tape media
manufacture by signing a deal with TDK, with the company now saying: "The recent
strategic alliance with TDK to develop and manufacture next-generation tape is
an example of an optimisation action expected to maximize ROIC (return on
invested capital) in the magnetic category."
In what it calls Emerging Storage which includes including
flash and removable hard disk drives, where it sees growth potential, Imation
plans to invest in higher growth and margin opportunities. These include its
Defender line of secure removable storage products and portable and external
hard drives for small-medium businesses (SMBs).
In its Electronics and Accessories area, the strategy is to
launch differentiated, higher margin products such as the XtremeMac and TDK Life
on Record premium audio lines, while rationalising (meaning killing the crap)
low-margin businesses, such as TVs and assorted video products.
Other investments inside Imation and its channel will include
expanded sales and marketing coverage for VAR (value added reseller) and OEM
channels, improved decision-support tools in IT, and international expansion,
focused on China.
Now, to the acquisitions, with Imation saying these will be
"focused on data protection, storage hardware, removable hard drive systems, and
related software, with the potential for several acquisitions each ranging from
a few million dollars to $50 million."
The leading removable hard drive company is ProStor, a venture
capital-backed startup. It tapped VCs for $12.2m in 2006, which made total
funding $18.4m, and hasn't raised any more funds since then. El Reg's storage
financial whizz kids think Imation has just erected an I Wanna Buy You Sign in
front of ProStor's head office.
A "storage hardware" buy is so open-ended as to be impossible
to interpret and "data protection" is also pretty vague. Is Imation going to buy
a backup company? If it is then buying one with a good run rate business, OEM
deals and a cloud strategy would be a good idea. That should narrow the field a
With Imation and Dell both being on the acquisition prowl they
will get lots of calls from board directors of companies, especially VC-backed
companies looking to cash in their investments, hoping to tap Imation's
signalled willingness to spend.