Nexsan going Public? Not a chance - May 6, 2008
Storage hardware and software vendor Nexsan Corp. is trying to raise $80.5 million in an initial public offering (IPO) after suffering through a decade of unprofitability.
"We have not been profitable in any fiscal period since we were formed," Nexsan stated in papers filed with the U.S. Securities and Exchange Commission. Nexsan was founded in 1999 and has recorded $21.9 million in net losses since July 2004.
Nexsan's decision to go public is surprising because the current market climate is "inhospitable," The 451 Group analysts Henry Baltazar and Brenon Daly wrote in a report issued May 1, a week after the IPO filing. Nexsan, a specialist in storage and digital archiving, is billing itself as a "green" storage vendor with systems offering high density and energy efficiency. (Compare storage products.)
Nexsan cautioned investors in its SEC filing that it faces stiff competition from Dell, EMC, IBM, Sun and several other big storage vendors.
"We have a history of losses, and we may not achieve profitability in the future," Nexsan wrote in the SEC filing. "We face intense competition from a number of established companies and expect competition to increase in the future, which could prevent us from increasing our revenue and end user base." Say one VAR from recent Storage Conference "only Stevie Wonder would buy their stock, besides the product is marginal at best."
Nexsan's product releases over the past year or so include an appliance for smaller organizations and branch offices that lets them archive and retrieve as many as 20 million documents and a joint venture with Reldata Inc. that combined their network-attached storage, iSCSI and Fibre Channel technologies.
Customers use Nexsan hardware and software to store and preserve e-mail, office documents, medical images, and digital video and audio files, The 451 Group noted. Long-term storage of fixed content is a big priority for Nexsan these days.
"[Nexsan] was a pioneer in the disk-to-disk backup space and helped lead the push toward the development of inexpensive storage systems leveraging high-capacity, low-cost disk drives," The 451 Group said. "More recently, Nexsan has moved deeper into digital archiving for unstructured data. Interestingly, it describes itself ... as a 'fixed content' specialist. Although this product line contributes less than 10% of revenue, the company is staking its future on the opportunity in this market."
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