SECTOR: Technology COMPANY: Quantum Corporation (QTM) SR. ANALYST: BENJAMIN SOMMER JR. ANALYSTS: SIGMUND CORREA, FADI HUMAID, JAKE EPSTEIN, JASON GOTTLIEB,

SECTOR: TechnologySECTOR: TechnologyCOMPANY: Quantum Corporation (QTM)COMPANY: Quantum Corporation (QTM)

SR. ANALYST: BENJAMIN SOMMERJR. ANALYSTS: SIGMUND CORREA, FADI HUMAID, JAKE EPSTEIN, JASON GOTTLIEB, ALEX PUGLISI

Investment RecommendationInvestment Recommendation

QTM

Recommendation

BUY

Current Price $2.65

1yr Target Price

$3.97

% Upside 49.9% Key investment drivers

1. Increase in IT service revenue with reduced costs 2. Well positioned with StorNext development 3. Significant patent advantages

Outsourced Data Hosting Micro-industryOutsourced Data Hosting Micro-industry

• IT service providers specializing in cloud hosting and software development for a variety of hardware and software platforms, as well as providing virtualized storage services primarily for corporate clients.

Revenue GenerationRevenue Generation

4

Storage Center Leassors/Buildings

Storage Facilities

Data Hosting and Management

IT/Software Services

Worldwide client

accessibility

Composes 90%+ of Revenue Generation

Service and software support

for clients

Industry Breakdown (by Market Cap)Industry Breakdown (by Market Cap)

5

= $35.67 Billion

Major Players in Industry – By RevenueMajor Players in Industry – By Revenue

6

Company SnapshotCompany Snapshot

Beta Stock Price

Shares Outstanding

Market Cap (MM)

Enterprise Value (MM)

2010 Revenue (MM)

EBITDA(MM)

3.31 $2.52 225.4 $568.01 $720.45 $671.62 $72.25

• Primary Services– Provides cloud backup, recovery, and archive solutions

• Customer Base– Small businesses to multinational enterprises– US and international governments

• Products– DX series, StorNext, Scalar, Tape and Disk Drives

Trends: Trends: Global Bandwidth UtilizationGlobal Bandwidth Utilization

8Source: Mintel/U.S. Census Bureau, Service Annual Survey

CAGR 46%

Trends: Worldwide IT Spending Trends: Worldwide IT Spending ForecastForecast

Source: Gartner Quarterly IT Spending Forecast

Trends: Enterprise Demand for Trends: Enterprise Demand for Outsourcings Outsourcings

Source: CISCO VNI, 2010

CAGR 21%

2009 2010 2011E 2012E 2013E 2014E

Opportunities: PatentsOpportunities: Patents

Patent for the de-duplication and replication technologies

Products of the Year 2010 by Storage Magazine

504 patents and 96 pending patent applications

Opportunities: StorNextOpportunities: StorNextStorNext File System delivers…

o a shared disk file system used where large files can be shared by users without delay

oEnables high performance file creation, storage, and Data SharingoEnhanced Data Management & Protection featuresoOpens up market share potential for Apple customers to expand on existing IT departments, making their investments more efficient

DCF ForecastsDCF Forecasts

2011 2012 2013 2014 2015

EBIT $90.36 $110.79 $138.70 $173.44 $219.45 - Taxes 6.33 7.76 9.71 12.14 15.36

------ ------ ------ ------ ------ $84.03 $103.04 $128.99 $161.30 $204.09

+ D&A 57.49 54.75 52.14 49.66 47.29 - CAPEX (18.97) (19.35) (19.74) (20.13) (20.54)

- Δ in NWC 10.52 5.46 11.87 15.72 22.08 ------ ------ ------ ------ ------

Unlevered FCF $112.02 $132.98 $149.52 $175.10 $208.77 Net Present Value $432.91

ValuationValuation

Year 2011(e) 2012(e) 2013(e) 2014(e) 2015(e)

FCF $112.02 $132.98 $149.52 $175.10 $208.77

DCF

WACC 20.72%

Growth Rate

2.5%

DCF Value (50%)

$890.99

1yr Price $3.12

Comparables

TEV/EBITDA (%25)

$681.40

1yr Price $6.91

TEV/Revenue (%25)

$159.50

1yr Price $2.73% Weight

% Weight

1yr Target Price

% Upside 12%

1yr Target Price

$3.97

Risks & SensitivitiesRisks & Sensitivities

One Year Price Targets

CurrentPrice

RecommendationRecommendation

De-duplication patent advantages Exclusive Apple Mac OSX offerings Increased demand for outsourcing and IT

spending Recent acquisitions in the industry (TMRK)

QTM

Recommendation

BUY

Current Price $2.65

1yr Target Price

$3.97

% Upside 41.9%

Back-up slidesBack-up slidesTechnology Sector | Outsourced Data Hosting Micro-industry

17

WACCWACC

18

rD 6.92%

Tc 7.11%

D $368,941,000 37.79%

TEV $976,391,000

E $607,450,000 62.21%

rE 29.40%

WACC: 20.72% 100.00%

beta 3.30

historical return 11%

risk free rate 3%

CompCo AnalysisCompCo AnalysisCompany Ticker TEV Revenue EBITDA EBIT

TEV/Revenue

TEV/EBITDA

Quantum Corporation QTM 790.3 671.6 72.3 11.3 1.2x 10.9x

1VMWare, Inc. TMRK3,160.

0 2,860.0 692.0 219.3 1.1x 4.6x

2Rackspace Hosting RAX4,950.

0 780.6 235.0 79.6 6.3x 21.1x

3Intuit, Inc. INTU1,612.

0 3,550.0 1,060.0 139.0 0.5x 1.5x

4Bottom Line Technologies EPAY 559.1 167.6 27.6 66.0 3.3x 20.2x

5Teremark TMRK1,400.

0 340.7 82.1 31.3 4.1x 17.1x

High 4,950 3,550 1,060 219 6.3x 21.1xMean 2,214 1,606 417 103 2.5x 11.7xMedia

n 1,612 781 235 80 1.2x 10.9xLow 559 168 28 11 0.5x 1.5x

CompCo ValuationCompCo ValuationTEV/EBITDA1yr Financial Projection I $159.50 Implied 1yr Price Target $6.91 Upside (Downside) % 147%

Price/Sales: 1yr Financial Projection II $681.40 Implied 1yr Price Target $3.64 Upside (Downside) % 30%

TEV/Revenue:1yr Financial Projection II $681.40 Implied 1yr Price Target $2.73 Upside (Downside) % -3%

Net Debt $186.84 Shares Outstanding 225.4Current Price (04-10-2011) $2.80