Acquisition and new products offering growth prospects
To further strengthen its Tiered Storage and Security Solution, or TSS, and accelerate strategic transformation, Imation Corp. (NYSE:IMN) acquired Nexsan, a provider of disk-based storage systems, for $120 million in January 2013. This acquisition enabled Imation Corp. (NYSE:IMN) to expand its small and medium-size business and distribution enterprises storage market. TSS gross margins improved to 22% from 19.4% in the prior year period, and reduced year-over-year loss by 53.8% to $3 million in the first quarter.
In June 2013, it launched its next-generation object store, the Nexsan Assureon secure automated archive solution, which will reduce the cost, size, and complexity of backups. It will also serve government, health-care, financial organizations, which are witnessing rapid, unpredictable growth in digital content. This launch will improve TSS gross margin, and Imation Corp. (NYSE:IMN) is expected to report overall gross margin of 19.4% this year from 18.4% last year.
With the aim of enhancing its revenue and market share in the flash and hard drive business, Imation Corp. (NYSE:IMN) expanded its IronKey product line with new secure USB flash and external disk drives. The IronKey D80 flash drives and H80 hard drives are tamper-resistant and encrypted with strong authentication, which enable the user to keep data secured. The continuous demand for data security from government, defense, and pharmaceutical companies, offers revenue growth opportunity to Imation Corp. (NYSE:IMN).
Moreover, the company extended its advance security technology to serve the needs of more numbers of users and other organizations too. Users can configure both these drives with Microsoft and Mac operating systems, which will again provide further growth opportunities as these are the major operating systems in use.
With the rising demand of data storage and security, the companies in this industry are competing hard to gain market share. SanDisk’s acquisition of Smart Storage System and launch of new micro SDXC will enhance its revenue and increase EPS. Fusion-IO, Inc. (NYSE:FIO)’s acquisition of NexGen Storage and growth with Spotify will generate higher growth opportunities with increased revenue and improved margin. Imation Corp. (NYSE:IMN) is enhancing its product line, and the acquisition of Nexsan will improve its growth and its EPS.
Looking at this, I recommend buying all three stocks.
The article Data Storage Companies With Growth Potential originally appeared on Fool.com and is written by Madhukar Dubey.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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