End of Resale Deal With Hewlett-Packard Stings IPO-Bound Violin Memory
Violin, you may remember, is the memory array company that uses flash memory chips to replace the hard-disk-based memory arrays that make enterprise applications run faster. It supposedly filed for an IPO earlier this month, but did so confidentially, under the JOBS Act, so the public can’t yet inspect its S-1 documents filed with the U.S. Securities and Exchange Commission.
And that’s unfortunate because, under normal conditions, if a pre-IPO company loses a key reselling partnership, it’s material-negative business development that requires an updated filing. And that’s exactly what appears to have happened to Violin.
On Friday, Bloomberg News, in a story that appears to be based on overly chatty investment bankers familiar with Violin’s IPO process, said that Hewlett-Packard “planned to end” a deal dating back to July of 2011 to resell Violin products as part of its portfolio.
That much is true, though Violin, in a statement drafted with the apparent intent of muddying the waters on the situation, said the relationship is “unchanged.” Here it is in full:
The current HP Violin relationship remains unchanged. The VMA product family (the Violin 3000 and vSHARE software) continue to be available to customers via HP as per the announced relationship (www.hp.com/go/vma). HP engineering continue to certify the VMA with additional servers, operating systems and joint selling and promotions. POC (proof of concepts) are currently active as are additional HP certifications.
HP has stated 3Par is the long term strategic direction for their company. Violin offers other products like the Violin 6000 through both our direct sales and our global reseller network as well as other software and system vendors which have been announced over the past 12 months.
So, if by “unchanged,” you mean that HP is still selling the Violin products already qualified and in the portfolio, then, indeed, the relationship is unchanged. That’s exactly what HP sources are telling me is the case. Violin products that have already been qualified will remain in the HP portfolio, mainly just to keep current customers happy, my HP sources tell me. What HP won’t be doing is adding any new Violin products to its resale portfolio.
Instead, HP will be favoring its own 3Par storage products. That’s the storage outfit that HP acquired in 2010 for $2.4 billion after a bidding war with Dell. Doing so would make sense in light of the renewed emphasis on boosting its own enterprise products of every stripe.
I’m no expert in the provisions of the JOBS Act, nor of the finer points of S-1 filings and the conditions under which an updated one is required. I also have no idea as to how much of Violin’s stuff HP has up to now been responsible for selling. But if I were someone considering taking a chance on Violin’s IPO, I’d have a lot of questions right about now.
Violin had sales in the neighborhood of $100 million last year, according to Bloomberg, and as of March had just raised $50 million at an implied valuation of $800 million. It will be interesting to see if losing HP as a resale partner affects Violin’s IPO plans.