Violin Memory plunges to a third of its IPO price on big loss
- Cromwell Schubarth
- Senior Technology Reporter- Silicon Valley Business Journal
- Email | Twitter | Google+
The Santa Clara flash memory storage company led by CEO Donald Basile posted a bigger than expected loss Thursday and missed revenue projections, which triggered a drop of about 50 percent in its stock when it opened on Friday.
It raised $162 million when it went public at the end of September with a price of $9 a share, but it dropped 22 percent in its first day of trading to $7.02. It was selling as low as $2.99 early on Friday.
Violin's net loss jumped to $34.1 million, or 85 cents a share, from $25.4 million a year ago.
Excluding items, the loss on the most recent quarter was 63 cents per share.
Revenue rose 37 percent to $28.3 million.
Analysts expected an adjusted loss of 44 cents, on revenue of $31.7 million.
The company also issued an outlook that is short of expectations, saying fourth quarter revenue will be between $30 million and $32 million. But Wall Street experts were projecting $44 million.
As a result analysts lowered their projections on Violin. Sterne Agee dropped its target to $4.50 from $6 with a neutral rating and J.P. Morgan lowered its target to $5.50 from $9, also with a neutral rating.
"We recommend investors trim positions in Violin Memory, as the stock is likely to exhibit severe trading volatility in the near term," J.P. Morgan's Mark Moskowitz said in a note.
Sterne Agee said part of Violin's problem may have been partly affected by stalled Federal government contracts due to the Washington shutdown.
Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.
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