Did Violin Memory just hang a ‘For Sale’ sign?
all-flash pioneer Violin Memory can’t sell enough all-flash arrays to make money. So its next move could be to sell itself in its entirety.
After another disappointing quarter, Violin CEO Kevin DeNuccio said the company has hired an investment banker to explore “strategic alternatives.” That usually means the company is for sale. But are there any takers with a glut of flash arrays on the market?
“There is no set timetable for completing the process, nor are there any assurances given that the exploration of strategic alternatives will result in any transaction being consummated,” DeNuccio said on the earnings call last night.
A financial analyst on the call asked DeNuccio what type of company might be interested in Violin.
“We think this is an attractive asset, both from a partnership or acquisition potential … “ he said. “The industry is obviously restructuring pretty dramatically with several companies buying storage companies and this company buying flash fabs. So we think there is a broad range of people interested in an asset like this.”
Violin hasn’t been able to find enough people interested in buying its flash arrays. Its $12.5 million in revenue was down 18% from the previous quarter and 42% from last year, and below Violin’s forecast of $16 million to $20 million. Violin lost $22.7 million in the quarter compared to $24.4 million the previous quarter and $23.5 million in the same quarter last year.
Perhaps the most disappointing aspect of last quarter was product revenue fell 63% to $6.3 million in the second quarter of availability of Violin’s Flash Storage Platform (FSP). Violin bet its business on its FSP, which added storage management and data protection features that were missing in its earlier performance-focused arrays. The FSP is still in early days and Violin added two new models this week, but a paltry $6.3 million in sales in a growing market doesn’t give much hope. Pure Storage, another all-flash pioneer, reported $131.4 million in total revenue and $113.6 million in product revenue in the same quarter.
DeNuccio admitted the quarter results were “extremely frustrating,” He said Violin failed to close one multi-million dollar deal involving a customer of its older 6000 technology that pushed back a FSP 7000 Series rollout.
“Our FSP and Concerto software, which consisted more than 50 million lines of code, has taken significant time and rigorous life testing to address the nuances of data risk, customer environment and to get things fully stabilized and operating properly,” he said.
He said Violin did gain a large repeat order of an FSP array from a large U.S. cable company and expects to add more than $1 million in revenue from that company each quarter. “This win … affirms our strategic premise,” Nuncio said.
Now if that cable company wants to get into the flash storage business, maybe Violin can find a buyer.