A comparison of upcoming IPOs, Netezza, BladeLogic, Voltaire and Compellent, with recent storage IPOs. If VMware is to be shown on this chart, it will be outside of upper-right quadrant.
Hi. I'm an IT Manager in Portland with a question on your diagram. When you ask the question "Whatever happened to Quality?" in reference to this diagram, I assume that you are noting the small size of this crop of IPO's, as compared to previous, recent IPO's in the same sector?
Yes, the new crop of storage IPOs seems to be not as attractive as earlier ones based on low revenue, small IPO proceeds and higher portion of company ownership being floated to public market. How many of these companies can handle the rigors of being public company as well as focus on growing the business? Is it sign of the making of storage bubble?
I think the problem is these companies are going public WAY TOO early. I am not sure who is advising folks these days on IPO strategies, but Isilon and Data Domain's market cap at IPO were greatly inflated. Compellent is barely bringing in revenue (I think based on the S1 they did about 20M in 2006. The cost of staying public is approximately $1M-$3M. (see http://www.foley.com/files/tbl_s31Publications/FileUpload137/3736/Foley2007SOXstudy.pdf)
When you are already loosing money, and only bringing in 10-30 million a year already at a loss, covering the costs of being public can end your company.
Hi. I'm an IT Manager in Portland with a question on your diagram. When you ask the question "Whatever happened to Quality?" in reference to this diagram, I assume that you are noting the small size of this crop of IPO's, as compared to previous, recent IPO's in the same sector?
ReplyDeleteWhat kind of quality do you mean?
Thx! Have a good one.
Charlie,
ReplyDeleteYes, the new crop of storage IPOs seems to be not as attractive as earlier ones based on low revenue, small IPO proceeds and higher portion of company ownership being floated to public market. How many of these companies can handle the rigors of being public company as well as focus on growing the business? Is it sign of the making of storage bubble?
Anil
I think the problem is these companies are going public WAY TOO early. I am not sure who is advising folks these days on IPO strategies, but Isilon and Data Domain's market cap at IPO were greatly inflated. Compellent is barely bringing in revenue (I think based on the S1 they did about 20M in 2006. The cost of staying public is approximately $1M-$3M. (see http://www.foley.com/files/tbl_s31Publications/FileUpload137/3736/Foley2007SOXstudy.pdf)
ReplyDeleteWhen you are already loosing money, and only bringing in 10-30 million a year already at a loss, covering the costs of being public can end your company.
Steven,
ReplyDeleteAgree with your comments. How many of these companies will be around 3-5 years from now?
Anil
What are your comments about the IPO of Compellent Tech next week? Will it be similar to VMWare?? Rather do we expect it to over-subscribe?
ReplyDelete-Manish
Manish,
ReplyDeleteWhat makes you think Compellent will act like VMware at IPO? I don't see or expect any similarity between the two.
Anil