Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Violin Memory Shares Plunge as Quarterly Results Fall Short

falling-stocksWas going public such a good idea after all? Violin Memory, the flash-based maker of storage equipment, just reported its first quarterly results since its IPO, and it’s taking a beating for them.

The company reported a quarterly loss of 85 cents a share, nearly twice the 44 cents that analysts had expected, and shares are down by $2, or a whopping 33 percent, in after-hours trading. Sales at $28.3 million were short of the $32 million that analysts had forecasted.

The outlook for the current quarter was no better: Violin said it expected to bring in between $30 million and $32 million, well short of the consensus view of nearly $44 million.

So how is Violin doing since that IPO this fall? After pricing at $9 a share, Violin opened at $7.50 on its first day of trading, Sept. 27, raising $162 million in the process, less than the $173 million it initially sought. That was after raising more than $180 million over about three years from venture capitalists including Highland Capital Partners, GE Capital, SAP Ventures, Juniper Networks and Toshiba.

As of the close of today’s regular session, the shares had fallen by 20 percent to $6 a share; they haven’t traded any higher than $7.90 a share, and that was on its third day as a public company.

According to its S-1 filing with the Securities and Exchange Commission, CEO Don Basile was granted 2.5 million fully-vested Violin shares worth $15 million as of today’s closing price for getting the company to an IPO by the end of September, which he did. Overall, he owns a little less than six million shares of the company, accounting for about 4.6 percent of the shares outstanding. As of today that’s a stake worth $35 million.

That for a company that lost $110 million on $74 million in revenue last year, and which has now lost a combined $93.3 million on revenue of $79.6 million in the first nine months of the year.

Its last round of venture capital funding valued the company at $850 million. As of today’s close, the market values Violin at only slightly more than half that: $491 million.


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