Why Quantum Corp. Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of data management technologist Quantum Corp. (NYSE: QTM  ) surged as high as 10% today after its preliminary Q3 results topped Wall Street expectations.

So what: The stock has plummeted since the summer on disappointing sales growth, but today's better-than-expected report suggests that demand is stabilizing. In fact, sales of Quantum's key StorNext scale-out storage solutions jumped 20% over the year-ago period, which is even triggering some optimism over accelerating growth going forward.

Now what: Management now sees Q3 adjusted income of $6 million-$7 million on revenue of $145 million-$146 million in revenue, both on the high end of its previous guidance range. "As we begin the new calendar year, we will increase our focus and investment in markets where the combination of changing customer needs and our product and technology strengths offer the greatest opportunities for growth and profitability," said president and CEO Jon Gacek. "In particular, we believe we have an advantage in scale-out shared storage, active archive and cloud-based data protection." Given Quantum's still-hefty debt load, fickle competitive position, and volatile stock price, however, I wouldn't be so quick to bet on it.

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