History (1996): Finally First OEMs for Quantum Bigfoot

After a slow start, the 5.25-inch low-cost Bigfoot HDD from Quantum found 3 OEM buyers: Compaq, which plans to integrate the unit into its Presario PC computer, Hewlett-Packard for its Pavilion, and Acer for its Aspire.

Quantum management were originally very optimistic about the future of Bigfoot.

They said that they were enjoying an outstanding response from customers and generating strong demand which would contribute to substantial revenue and earnings gains throughout FY97 ending next March.

A few months later, Quantum revealed that demand was in fact soft and sales below expectations, leading to excess inventory and price cutting which would adversely impact FY97 results, and which did, of course, lead to an immediate decrease in the value of Quantum stock.

This was reason enough, as is often the case in USA, for some shareholders to take Quantum to court. At the end of August, a class action suit was initiated in the California Superior Court of Santa Clara County by plaintiff Howard Gunty Profit Sharing on behalf of purchasers of Quantum common stock during the period February 26 to June 13.

What’s the shareholder’s beef, apart from disastrous investments? Before the truth about the failure of Quantum’s Bigfoot product line came out and stock collapsed, 7 Quantum insiders had sold over 265,543 shares of their stock at artificially inflated prices as high as $25-5/8 per share, pocketing over $6.5 million in illegal insider trading proceeds… Several of Quantum’s insiders, including company’s CEO and the heads of firm’s desktop and portable storage operations and its tape storage operations, sold 99-100% of their Quantum stock, complained plaintiffs in the suit.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 105, published on October 1996.