Overland’s Ordeal: Turnaround Continues as New Management Team Sets New Course, Readies New Products

Not too long ago, I got a chance to talk with Jillian Mansolf, who joined San Diego’s Overland Storage (NASDAQ: OVRL) as vice president of global sales and marketing about 18 months ago. A few days earlier, Overland had disclosed its acquisition of Sunnyvale, CA-based MaxiScale, a three-year-old data storage startup, a deal that prompted me to seek an update from the company.

Once again, though, I was struck by the long ordeal Overland has faced since 2005, when the company lost its single biggest customer. Hewlett-Packard had decided to phase out its business with Overland, which served as the manufacturer of tape-based data storage equipment made and sold under the HP brand.

Six years ago, HP accounted for more than half of Overland’s revenue—which totaled $235 million in fiscal 2005. Filings for Overland’s fiscal 2010, which ended June 27, show that HP represented 22.5 percent of Overland’s total net revenue, which had plunged to $77.7 million. The loss of HP’s business, Mansolf said, “changed the whole perspective of the business model for the company” and required significant restructuring. “That truly has been the balancing act over the past two to four years.”

Mansolf, who previously worked at Data Robotics, Dell Computer, and Maxtor, is part of the management team that Eric Kelly assembled after he stepped in as CEO in January 2009. Kelly joined Overland’s board in 2007 as the president of Silicon Valley Management Partners, a management consulting and M&A advisory firm.

Overland was founded in 1980 (as Overland Data), and originally manufactured IBM-compatible 9-track tape drives. The company diversified into disk-based storage with a small acquisition a decade ago, but tape-based storage has remained a core part of the company’s business. In fiscal 2010, tape-based products made up 46.6 percent of Overland’s revenue, according to the company’s 10-K filing.

“Tape still is a viable part of our business,” Mansolf told me. “You’ll see us continue to engineer a lot of tape products. It’s still a big market, and there are not a lot of other companies that manufacture tape any more that still have IP covering their tape-based technology.”

Still, tape-based data storage doesn’t exactly represent the future. As Overland CEO, Kelly took over the foray into “Snap” network attached storage technology that Overland had acquired from Adaptec in mid-2008 and reduced Overland’s workforce from 275 in early 2009 to about 200 today. He also hired former Data Robotics CEO Geoff Barrall as CTO, and established a corporate beachhead in San Jose, CA.

“MaxiScale fits into Geoff’s vision of where he wants to take the company,” Mansolf told me.

As Mansolf explained it, Overland’s Snap servers have limited scalability. MaxiScale already had customers and revenue, and Mansolf said MaxiScale could be easily integrated with Snap’s GuardianOS, giving Overland the ability to provide what she calls “cluster servers” to meet customers large-scale data storage needs.

Overland has not disclosed financial terms of its MaxiScale acquisition, but Mansolf hinted it was a bargain. “We were able to take advantage of an unfortunate situation, which was their inability to raise capital going forward.”

She also hinted that Overland has a series of new product launches in the pipeline for the coming year. “We’re excited for 2011,” she said. “We’re excited to be taking new products to market, and we’re feeling pretty bullish on the market.”

Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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