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Violin Memory completes IPO, shares drop

Violin Memory finished its first day as a public company today, $146 million richer and with a day of disappointing trading behind it.

Violin completed its initial public offering Thursday night, pricing shares on the New York Stock Exchange at $9 – the midway point of its target range – to raise $162 million. By the close of trading today, its share prices were down to $7.11 for a 21% drop.

Violin CEO Don Basile said one thing didn’t change for the flash array vendor today.

“Our strategy doesn’t change,” he said. “Our one true competitor is EMC, and we focus every day on beating EMC.”

What does change is the way people look at Violin now. “It’s a great milestone,” he said. “But once you’re a public company, you have a quarterly scorecard and you have to executive every quarter.”

That scorecard was mixed for Violin as a private company. According to its IPO filing, Violin’s revenues steadily rose, from $11.4 million in 2010 to $73.8 million in 2012 and $51.3 million in the first half of 2013. But losses also mounted – Violin finished 2012 $109.1 million in the red and lost $59.2 million for the first six months of this year.

Basile said Violin will moderate the growth of its sales and marketing teams now to try and shrink those losses.

“We will invest in sales and marketing at the same pace or slightly above pace at what we have done,” he said. “We quadrupled the size of the company the last two years. We don’t have to expand as rapidly.”

As for the drop in share price on the first day of trading, Basile said “we’re focused on the long-term strategy, not what happens on a given day.”

While the strategy focuses on EMC, there is really a lot more competition out there. Violin was the market leader in flash array sales last year according to Gartner, but EMC and other leading storage vendors did not have an all-flash array platform then. Now just about all of them have all-flash systems.

“I attribute a lot of Violin’s success to being early to market,” said Mark Welke, NetApp senior director of product marketing. “They started in 2009 developing a flash array. We started our flash strategy around the same time and went for flash cache initially.”

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