StorageTek CEO vows sales turnaround

Executives at struggling storage systems vendor Storage Technology say it's a leaner, more focused company after six months of internal scrutiny that has included a revamped marketing plan, personnel cuts and the introduction of several products.

But it's Patrick J. Martin, a former Xerox executive who was appointed chairman, president and CEO of the company four months ago, that has analysts confident that StorageTek can rebound from slumping sales.

Martin is "very focused on operation issues," said John McArthur, an analyst at IDC. "He understands [operations costs have] been a drag on StorageTek's earnings. I give him a better-than-average chance at succeeding."

Martin attributed the company's sales slump to poor focus, marketing and overall execution. The company's four-year-plus struggle was capped last year by IBM's decision not to renew a contract to sell StorageTek's disk-array subsystems under the Ramac storage banner. That caused a 20 per cent drop in revenue, Martin said.

The loss of the IBM channel, as well as late product deliveries, pushed down revenue 16 per cent for the first nine months of this year, compared with the same period last year.

Yet StorageTek is back on track after a restructuring this year cut almost 1,300 jobs and added 150 salespeople. The company plans to further increase its direct sales force by 20 per cent in the next three years.

With a new marketing plan and products, Martin said, StorageTek will be able to grow revenue by 50 per cent and increase profits by a factor of eight to 10 during the next three years.

Martin said that the company's focus will return to tape automation but that will also focus on virtualisation, or multiple storage media, through open storage-area networks (SAN).

And with the introduction of its L20 tape library system in September, plus the T9940 tape drive and the StorageNet 6000 series network manager in October, Martin said, his company is poised to make a comeback.

"We're a storage provider, not just a tape provider," he said. "We're betting on disk, tape and SAN."

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