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Quantum Management Discusses Q1 2013 Results - Earnings Call Transcript

Not closing forecasted big deals was part of the issue in Europe but was also a challenge in other reason -- regions most notably North America. We saw it across all our product lines but in -- it was particularly the case with Enterprise DXi. Basically, I'd say that in this economic climate, the bigger the deal, the higher the risk of a purchase not getting funded and appeal not being issued regardless of the size of the entity or geography, and we certainly saw this in Q1. Also, the bigger the deal, the greater the need to be close to the end user which, as I mentioned earlier, is harder with a channel-centric model such as ours. In short, this reinforces both the need to be working more deals, so if a deal falls out, we have others to work on closing and the need to get deals closed as soon as possible during the quarter. As I said earlier, not counting Europe, our inability to close big deals impacted our Q1 revenue by approximately $4 million.

The shortfall in OEM revenue was a unique situation with one of our OEM partners who lowered their forecast and revenue by $2 million during the quarter. This involved a low-end, low-margin product but impacted us at the revenue line. We believe this is a reflection of the economic climate and we have now taken necessary steps to validate our OEM partners' plans early in the quarter.

Finally, our tape royalty was approximately $1 million lower than expected due to a change in the basis on which royalties are reported and paid by one of the tape media manufacturers. This happened during the quarter. This was a one-time event that affected the timing of royalties but not the ultimate amount we will receive. So although it impacted Q1, we will believe -- we believe that we'll be on track for approximately $13 million of tape royalty this quarter.

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