Reuters: Hot Stocks: UPDATE 1-Violin Memory strikes sour note in market debut

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UPDATE 1-Violin Memory strikes sour note in market debut Sep 27th 2013, 17:24 Fri Sep 27, 2013 1:24pm EDT * Shares fall 20.6 pct * IPO values Violin Memory at $736.4 mln * IPO of 18 mln shares priced at $9 each (Add details, analyst comment; updates share movement) Sept 27 (Reuters) - Shares of flash storage provider Violin Memory, backed by Toshiba Corp, fell nearly 21 percent in their market debut, as investors remain skeptical about an intensely competitive data storage market. Data storage companies such as Fusion-io Inc, Nimbus Data and Pure Storage have been battling slowing growth rates. Fusion-io shares have fallen more than 40 percent this year. "There are certain companies that have done a better job than others, Violin Memory is not one of those," said Technology Insights Research LLC analyst Nehal Chokshi. Violin's stock was down nearly 17 percent at $7.49 on Friday afternoon, being the top percentage loser on the New York Stock Exchange. The company priced its initial public offering at $9 each - the mid-point of its proposed $8-$10 range. At that price, the maker of memory arrays for data centers was valued at about $736.4 million. The valuation was too high and not viable, said Chokshi. Violin, which competes with EMC Corp, Hitachi Data Systems Corp and NetApp Inc, sold 18 million shares to raise $162 million. It plans to use the net proceeds for working capital and repaying debt. The company's net loss widened to $109.1 million in its fiscal 2013 that ended in July from $16.7 million in fiscal 2011. Revenue grew more than 500 percent to $73.8 million. Violin, co-founded by Harvard University graduate Jon Bennett in 2005, is headed by former Fusion-io Chief Executive Donald Basile. Toshiba holds an 11.2 percent stake in the company. Shares of cloud-based business communications services provider RingCentral Inc, another Silicon Valley that went public on Friday, soared 50 percent. Santa Clara, California-based Violin, which planned an IPO since 2011, had listed JP Morgan, Deutsche Bank Securities and BofA Merrill Lynch as lead underwriters. (Reporting By Neha Dimri and Lehar Mann in Bangalore; Editing by Sriraj Kalluvila and Joyjeet Das) Link this Share this Digg this Email Reprints

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