MTI Guns For $20M In Equity Financing; EMC An Investor

This is not EMC&s first investment in MTI. The Hopkinton, Mass.-based storage vendor already contributed $4 million as part of a $15 million investment in MTI in June 2004. MTI is planning to use the net proceeds from this latest offering to support operations, growth and other corporate functions, said company executives.

Victor Chynoweth, vice president of finance at MTI, Tustin, Calif., said the company expects to be profitable by late this year. Earlier this month, MTI reported a loss of $3.6 million, or 10 cents per share, during its first fiscal 2006 quarter, compared with a loss of $1.9 million, or 6 cents per share, the year before. Revenue for the quarter was up 51 percent to $39.3 million.

John Orr, president of Stack Computer, an Irvine, Calif.-based EMC storage solution provider, said EMC&s investment is extremely beneficial to him. “MTI plays in the commercial space, where I don&t play,” he said. “In fact, if they weren&t [around], I might get a serious competitor.”

David Klauser, CEO of Prism Technologies, an Oakbrook Terrace, Ill.-based EMC partner that also works with a number of other vendors, said EMC investing in MTI is the wrong message to send to MTI&s customers, but could help Prism competitively in the long run. “If MTI walks into a customer, and if the customer is educated, he will know MTI will sell only EMC,” he said. “It&s not like Prism, where we have no investment dollars from a vendor to influence our decision.”

Steve Krauss, business operations manager for enterprise storage at GTSI, Chantilly, Va., said he is surprised EMC doesn&t just buy MTI. “Despite how MTI is not making any money, they have very talented people,” Krauss said. “I don&t understand why EMC doesn&t buy them and bring its people in.”