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Violin Memory Post-IPO Fall Caused By Bad Timing, Fast-Maturing Flash Storage Market: VARs

edited October 2013

imageViolin Memory Post-IPO Fall Caused By Bad Timing, Fast-Maturing Flash Storage Market: VARs

Violin Memory's post-IPO drop was caused in part by bad timing as the flash storage business rapidly matures, solution providers said.

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Comments

  • This is a very good article. What Mr. Norbie, Maltz and Baldwin describe is very much on target as far as the flash array market is concerned. They re-inforce the fast pace of the market, the uniqueness of a product a year ago no long translates into today's flash array market because the available choices have multiplied considerably. Further, last year's discussion was about high performance and low latency, toay with so many vendors offering those characteristics, this year's discussion in flash arrays is around storage features and software-defined storage aspects. So a Gartner report from a year ago, no longer reflects today's flash array marketplace in my opinion. I've written about this here : http://www.digitalcld.com/cld/sea-change-for-a-gartner-report-on-flash-storage-last-year-was-well-last-year/

    At the same time, I think other forces beyond these resulted in the reaction of the market to the IPO. It's important to look at what market analysts had to evaluate the IPO - they had an SEC S-1 document. That document had probably more to do with the resulting marketplace reaction to the IPO than most things. Consider that in the document sentences like this jump out and grab your attention : "the report of our independent registered public accounting firm for the year ended January 13, 2013 contains a statement with respect to substantial doubt as to our ability to continue as a going concern as a result of recurring losses from operations and negative cash flows." Potential investors might find this troubling. This is in the risks section and as you look at the finances it is a troubling picture with net losses for the past year pegged at $109 million and escalating in the current year. Further, the compensation of just two executives (the CEO and COO) almost tip $24 million. As a percentage of last years revenue that works out to an astounding roughly 32%. It is understandable that many analysts and potential investors would have been troubled by the S-1. You can find the S-1 here : http://www.sec.gov/Archives/edgar/data/1407190/000119312513346734/d366503ds1.htm

    This is a very tough market that is becoming even more so going forward.
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