Overland and Snap Server: Behind the Numbers

At first blush, it looks like Overland Storage's purchase of Adaptec's Snap Server NAS line is a no-brainer. It's a $3.6 million investment in a business that generated more than $18 million in sales last year alone, shipping 200,000 units.

Add to that the fact that the NAS market is already a $1.2 billion-a-year industry that is expected to grow some 15 percent per year well into the next decade, and it looks like a pretty shrewd bargain.

But once you get more into the details, as Chris Mellor does in this report, things get a little muddled. In the first place, the $18 million in sales is down from nearly $40 million that the unit was achieving just four years ago. Profitability is also questionable, despite the strong brand name.

Overland executives say they can make up for these deficiencies through improved marketing and sales efforts, and there are a lot of cross-marketing opportunities between Snap Server and Overland's storage portfolio, particularly in the area of data protection.

Overland is looking to turn the business into a $100 million concern, which is not beyond the realm of possibility. But it sure is a tall order.