Violin Memory (VMEM) Has Rough IPO, But Shows Signs Of Recovery

Posted Sep 30, 2013

Violin Memory, Inc. (NYSE:VMEM) went public on Friday with a pricing of $9 per share, but it opened at $7.41.  The stock ended up closing trading at $7.02 per share.  Today, the company is trading at around $7.38 as of the time this article was written, which is up over 5% from Friday.

“The market goes up, it goes down,” stated Violin CEO Don Basile in an interview. “We just have to keep executing, and the investors will understand the value of enterprise storage.”

Violin Memory sold 18 million shares at $9 each, which brought in $162 million at a valuation of slightly under $900 million.  Originally, Violin Memory wanted to hit a $2 billion valuation when they filed confidentially for an IPO.

Violin Memory was contrasted to other Silicon Valley IPOs that took place recently, such as FireEye and Rocket Fuel.  Thee companies saw their stock more than double on their first day of trading.

Violin Memory is an eight-year storage company that builds solid-state drives utilizing flash memory.  Violin Memory’s growth was largely attribute to a contract that they had with Hewlett Packard.  Sales went from $11.4 million to $53.9 million, but HP cancelled their contract.

Violin Memory’s revenue slowed down to a slower rate at $73.8 million.  The company’s net loss more than doubled though.  The net loss went from $44.8 million to $109.1 million.  Fortunately, Violin Memory signed new sales partnerships with Dell, SAP, and Microsoft.

Violin Memory raised $186 million from SAP Ventures, Juniper Networks, and Toshiba prior to the IPO.  Toshiba owns over 14% of Violin Memory.  None of these companies sold shares in the company.

[Source: Mercury News]