Violin Memory Fires CEO Basile as IPO and Quarterly Results Disappoint
Violin Memory, the flash-storage player, just fired CEO Don Basile (pictured) in the wake of the lousy performance of its initial public offering and quarterly results that were worse than anyone expected.
The company named Howard A. Bain III, the chairman of its board, as interim CEO.
The news comes as Violin has turned out to be something of a disaster since its Sept. 27 IPO. Having priced at $9 a share, it opened for trading that day at $7.50, and raised $162 million in the process. Its shares have fallen by nearly 70 percent since then. And last month, it reported a quarterly loss that was nearly twice as bad as anyone expected: 85 cents a share on $28.3 million in sales. That’s versus a 44-cent loss on $32 million in revenue that analysts had expected.
Expectations had certainly been high for Violin, especially given all the venture capital money that had been poured into it. It raised at least $96 million in a pre-IPO round in February, and a year before that it raised $50 million. All told, it had raised more than $180 million over three years from venture capitalist firms including Highland Capital Partners, GE Capital, SAP Ventures, Juniper Networks and Toshiba.
Against the backdrop of last week’s IPO by rival Nimble Storage, the shares of which rose more than 60 percent in its debut, the optics of Violin’s weak performance are only getting worse, and rumors that Basile’s head was on the block have been rumbling for a few days.
According to its S-1 filing with the Securities and Exchange Commission, Basile had been granted 2.5 million fully-vested Violin shares worth $6.8 million as of today’s price before the news was announced, for getting the company to an IPO by the end of September, which he did. Overall, he owns just under six million shares of the company, accounting for about 4.6 percent of the shares outstanding.
Numerous investigations by law firms that specialize in shareholder lawsuits are under way.
Here’s the announcement:
Violin Memory Announces Appointment of Howard A. Bain III as Interim CEO
SANTA CLARA, Calif. — (BUSINESS WIRE) —
Violin Memory, Inc., (VMEM), a leader in persistent memory-based storage solutions, today announced that Howard A. Bain III, Chairman of the Violin Memory Board of Directors, has been appointed interim Chief Executive Officer, effective immediately. Mr. Bain’s appointment follows the decision of the Board of Directors to terminate Donald Basile as Chief Executive Officer. Mr. Bain will remain Chairman of the Board.
The Violin Memory Board of Directors has initiated a search process and retained an executive search firm to identify a permanent CEO.
Mr. Bain, who has served as Violin Memory’s Chairman since August 2013 and as a member of the Board since October 2012, brings to the Company over 40 years of operational, financial and leadership expertise, having served as Chief Financial Officer at several public companies, including Portal Software, Inc., Vicinity Corporation, Informix Corporation and Symantec Corporation. He has significant industry experience having served in senior management positions at various technology companies in the areas of semiconductor devices and manufacturing equipment, laser-based large screen projection systems, and computer disk drives. In addition, Mr. Bain has served as a consultant on corporate governance issues since 2004, and is a Governance Fellow with the National Association of Corporate Directors.
David Walrod, Chairman of the Nominating and Corporate Governance Committee of the Board of Directors, said, “The Board believes this leadership change is necessary to enhance the management team’s operational focus and ability to execute the Company’s plans for profitable growth. We are, however, fortunate to have someone with Howard’s extensive operational, financial and leadership experience ready to assume the role of interim CEO at this important juncture for the Company. During his time as director of Violin Memory, Howard has gained a deep understanding of the Company’s products, customers, strategy and management team, as well as the significant growth opportunities in the enterprise memory market. We are confident that he is the right person to lead Violin Memory while we search for a permanent replacement to fill the CEO role.”
“Violin Memory is focused on maintaining the operational flexibility to manage through the emerging dynamics of our industry, with financial resources on hand to achieve our objectives. While our fundamental strategy to drive growth remains unchanged, we will pursue additional tactical initiatives to improve the overall cost efficiency of the business and improve sales leverage through our partner and indirect channels. We have a robust product roadmap in place that positions us well to take advantage of the transition to a memory-based data center and build an even stronger future for all of our stakeholders,” said Mr. Bain. “Having served as Chairman of the Board, I am well aware of the many opportunities ahead and look forward to engaging with the Company’s customers, team members and shareholders in the coming weeks. Most importantly, I am confident in our team’s ability to execute and provide our customers with the high level of support and service that they have come to expect from us.”
About Howard A. Bain III
Howard has served on our board of directors since October 2012. Since 2004, Mr. Bain has been an independent consultant in all aspects of corporate finance. Mr. Bain has served as Chief Financial Officer at several public companies including: Portal Software, Inc. from 2001 to 2004, Vicinity Corporation in 2000, Informix Corporation from 1999 to 2000, and Symantec Corporation from 1991 to 1999. Prior to that, he served as a Senior Audit Supervisor at Arthur Andersen LLP, where he was a certified public accountant.
He is also a Governance Fellow with the National Association of Corporate Directors. Mr. Bain has served on the board of directors of Nanometrics, Inc. since April 2008, Learning Tree International, Inc. since 2001, as well as Nok Nok Labs, Inc. a private venture capital financed company. Mr. Bain holds a B.S. in Business Administration from California Polytechnic University. Mr. Bain’s significant Board, operational, financial expertise, including his experience as Chief Financial Officer at several public companies, as well as his experience in various technology companies in the areas of semiconductor devices and manufacturing equipment, laser-based large screen projection systems, and computer disk drives is directly relevant to Violin’s business and his responsibilities to the Board.