Plasmon's losses widen but new product sales grow
Professional data storage specialists Plasmon plc (PLM.L) as expected today reported wider losses in the year to end March.
It said revenues fell 12% to £39.8m while the loss on continuing activities before tax increased by 17% to £9.5m. However, the Group had earlier flagged some of its difficulties, particularly a severe downturn in sales in January and February due to a several short-term factors and the stock market responded to the positive prospects outlined today in the results by bidding up its share price 4% to 59p.
Plasmon said 34% growth in newish UDO technology revenues was offset by falling sales of legacy products, but although UDO sales are growing more slowly than originally expected, by the end of the year they represented half of sales and are finally overcoming the drag of its legacy products.
Chief Executive Nigel Street (pictured) said: "The launch of UDO technology coincided with the introduction of SATA disk drives that have since enjoyed widespread adoption in the archival storage market. However, a recent survey indicates that concern over the dependability of SATA based archiving is growing and that some 50% of IT managers now believe that a second tier of removable storage is required to provide long term data security.
"We believe this trend will continue and this belief is being reinforced by our major OEM customers who plan to deploy UDO in their tiered archival storage solutions later in 2006."
Combating SATA
To combat the threat of SATA disks Plasmon developed the UDO Archive Appliance, which combines the benefits of UDO and SATA disk in a tiered storage architecture. Initial shipments of the Archive Appliance started to its major medical imaging customer in March 2005 and steady progress was achieved as they rolled out pilot systems and confirmed the reliability of the solution.
"With these trends gathering pace and with our 60GB UDO on schedule for delivery in early 2007, we still expect UDO to deliver long term growth and profitability," Mr Street said.
The Cambridge-based group said the highlight of the year was securing IBM as an OEM customer for UDO library solutions. After an intensive period of product qualification it began product shipments in September and IBM subsequently made first shipments to their customers in November 2005. Although initial sales volumes have been disappointing, IBM provides a major endorsement for UDO technology and Mr Street expects it to become a significant sales channel.
US reorganisation
During the year Plasmon reorganised its US management team to strengthen sales and marketing and replace the President who returned home to the UK. They recruited five new senior people and divided the responsibility for the Colorado Springs plant and the Denver based sales and marketing organisation.
Mr Street said the relationship with Konica Minolta has developed "extremely well and we are now in detailed OEM discussions about providing a full range of UDO solutions for the Japanese and Asian markets".
The Plasmon brand is largely unknown in Asia and its sales revenues in the region have been small. Securing a well known brand should provide good growth prospects in a market that traditionally favours optical storage technology.
1st June 2006
