Just the other day, fellow Fool Sean Williams wondered if this was the end of the road for data backup expert Quantum (NASDAQ:QMCO). The company is losing money and running out of cash and props up its day-to-day liquidity needs with more and more corporate debt. Meanwhile, more modern solutions from rivals EMC (NYSE:EMC) and NetApp (NASDAQ:NTAP) are making Quantum's largely tape-based product portfolio obsolete in a hurry.

As if wanting to answer Sean's big question, Quantum shares leaped as much as 24% skyward on Friday.

Investment firm Starboard Value just opened a 16% stake in Quantum's shares, according to SEC filings. This $38 million investment makes Starboard the largest owner of Quantum shares and was based on the thesis that Quantum shares are undervalued -- but Starboard also has some ideas on how to run the business more efficiently.

Starboard plans to talk these ideas over with Quantum's board and management. The discussions may lead to Starboard representation on Quantum's board of directors, and the as-yet unspecified improvements might "dramatically increase profitability and unlock value for shareholders."

Pretty standard fare for activist investors, in other words. And it's not like Quantum couldn't use some advice. Here's how the stock has performed versus the main competition in recent years:

QTM Chart

QTM data by YCharts

It's not a pretty picture. Starboard hasn't spilled the beans on specific improvement ideas, but I can come up with a few possibilities:

  • Inject capital into the flimsy balance sheet to give Quantum a chance to right the ship before it sinks.

  • Phase out or sell off the hardware business and refocus on backup and encryption software instead. Management currently thinks customers get more value and better support when they buy Quantum's entire package of hardware and software -- whether it's built around hard drives or tape decks -- but that leaves plenty of high-margin business on the table. Why not let EMC and friends worry about designing and building expensive hardware solutions, and then just ship the software you need for managing it all?

We'll hear more about Starboard's plans over the coming weeks. I think Quantum can remain relevant to the booming Big Data market, but the company will have to make some tough decisions to stay afloat. Add Quantum to your Foolish watchlist to see if Starboard can make it happen.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.