Revolution at BakBone

BakBone Software announced a realigned corporate strategy focused on its core markets.

The realigned strategy includes the closing of the Company’s ColdSpark operations, which were acquired in May 2009. The Company will effect a smooth transition for those customers who currently utilize the technologies offered by ColdSpark to facilitate message management in enterprise environments. BakBone will record a non-cash impairment charge of approximately $12.6 million in the fourth quarter ended March 31, 2010 and expects to incur approximately $300,000 in personnel related expenses related to closing ColdSpark.

"Our Board of Directors and senior management team have concluded that the best opportunity for BakBone to gain consistent profitability and generate returns to shareholders is by focusing our resources on our core storage and data protection markets," said Steve Martin, senior vice president, Chief Financial Officer and Interim CEO. "By exiting the message management business, our entire organization of some 240 dedicated and motivated employees can devote their full attention to our existing 15,000 customers and our expanding NetVault product suite. The NetVault product line includes NetVault: Backup, NetVault: FASTRecover and NetVault: SmartDisk products, which are gaining increased traction in the market, and is offered through our worldwide network of channel partners. By reinforcing our relationship with these partners, and offering best-of-class products and customer service, we believe that BakBone will be a more focused and financially-capable company. Furthermore, we expect our realigned strategy will eliminate the risk of ColdSpark’s comparatively longer sales cycle, stabilize our cash utilization and position the Company to generate enhanced returns for our shareholders," Mr. Martin added.

Comments

BakBone is entering into a new strategy, following the surprising resignation last month of Jim Johnson as president and CEO, replaced by Steve Martin, currently CFO and interim CEO.

Johnson had the idea to diversify the company's portfolio, notably with the acquisition in May 2009 for $16 million of ColdSpark, in the exploding market of enterprise email archiving. It was apparently a good idea to add this activity to its traditional backup software NetVault. The Taneja Group wrote the following month: "BakBone is providing new solutions that meet data protection, messaging and policy management needs across a range of industries at multiple business levels. As we have from its beginning, we strongly support BakBone in its quest to protect, analyze and manage data wherever it is found."

At the same time, BakBone has just decided to fire the guy who was in charge of its future products, Kenneth Horner, senior VP, corporate development and strategy, entitled to receive $117,500 following his departure. This storage veteran got this position in 2005 after being VP of worldwide marketing and channel operations at DataCore and previously at Seagate Software, Sterling Software, Tech Data and Rexon/WangTek.

Furthermore, the company named Dan Woodward senior VP, product delivery, a former management consultant and advisor to several software and related high-tech firms.

BakBone is back to backup only. Email archiving was a new business needing some time to be profitable and the software company was recording lower net incomes these past days - $0.6 million last quarter compared to $1.1 million for the previous one - but with increased sales. By stopping this activity, the company will probably offer a better short-term value. With the idea to find rapidly a buyer rather than to insure a better long-term life?