Iron Mountain drops cloud storage division in major reorganisation

Iron Mountain has announced a major refocusing of the company, and is planning to sell its digital storage division and some international subsidiaries.

The company is exploring selling its digital archiving, eDiscovery and online backup and recovery businesses to focus on its core storage and compliance arms.

The announcement came barely a week after Iron Mountain's chief executive stepped down to be replaced by company chairman Richard Reese.

"We first entered the digital business 10 years ago as a natural extension of our core services to address a clear customer need," Reese said.

"Our digital business has faced a number of challenges resulting from a rapidly changing environment. Our board and management undertook a strategic review of the digital business beginning last fall and concluded that the company could not continue investing in technology development."

Reese said that Iron Mountain will keep international subsidiaries that are profitable, but will shut down those that fail to contribute to the bottom line and are not first or second in their markets.

The firm will also focus on developing operations in Brazil and its joint venture efforts in Russia, India and China.

"It sounds like Iron Mountain has made the decision to get out of the low-margin business and improve its capital leverage," Vivian Tero, programme director of governance, risk and compliance infrastructure at IDC, told V3.co.uk.

"It's going to focus more on services and less on developing and supporting its own applications. It should still be able to provide application-focused services, but instead of developing technology it sounds like it's more willing to license technologies."

Analysts had predicted that Iron Mountain would drop cloud storage, but not this quickly. The move came after hedge fund Elliot Management, which owns around five per cent of the company, tried to install new board members.

Under the plan released by Iron Mountain, shareholders will receive an additional $2.2bn in dividends over the next two years.