RAID controller vendor Adaptec (OTC:ADPT) is a value play in the technology sector, based on a strong balance sheet, interesting because it has a possible catalyst to ignite growth. Because of the proliferation of digital content, the storage sector offers growth opportunities for companies that can keep up with the technology.
Overview – the company describes itself as follows:
Adaptec provides trusted storage solutions that reliably move, manage, and protect critical data and digital content. Adaptec's software and hardware-based solutions are delivered through leading channel partners and Original Equipment Manufacturers (OEMs) to provide storage connectivity, data protection, and networked storage to enterprises, government organizations, medium and small businesses worldwide. More information is available at www.adaptec.com.
Our future revenue growth is largely dependent on the success of our new and future products, obtaining and fulfilling our obligations on OEM design wins, and growing our market share in the channel. In September 2008, we acquired Aristos for a purchase price of $38.9 million, plus an obligation to pay up to $2.4 million contingent upon the employment of certain Aristos employees. We expect that the acquisition of Aristos will allow us to expand into adjacent RAID markets that we believe provide us with growth opportunities, including blade servers, enterprise-class external storage systems and performance desktops, and will provide us with a strong ASIC roadmap. This acquisition should also enable us to pursue new OEM opportunities and expand our future channel product offerings containing unified serial technologies. For example, in October 2008, we announced a design win from IBM for our RAID Storage Processor technology, which was enabled by the Aristos acquisition. However, we cannot predict the extent to which the potential benefits of this acquisition will offset the declining OEM revenue from our serial legacy products and our parallel SCSI products considering our loss in market share and the potential adverse impact on our business of current economic conditions. We expect the revenue levels from our serial legacy products sold to OEM customers to significantly decline over the next two to three quarters. We will continue to seek additional growth opportunities beyond those presented by our existing product lines by entering into strategic alliances, partnerships or other acquisitions in order to scale our business. We will also continue to review and evaluate our existing product portfolio, operating structure and markets to determine the future viability of our existing products and market positions.
As mentioned in earlier calls we are very exited that the integration of Aristos will help drive new opportunities for Adaptec. We have already announced that we won an opportunity with IBM. We also have another large well known OEM where we are shipping in low volume.