Day Two Outlook For Fusion-io IPO… Data Decentralization Rules (FIO, AAPL, WDC, AKAM, SNDK, EMC)

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Fusion-io Inc. (NYSE: FIO) might not have closed near its highs on its initial public offering debut on Thursday, but this did command a double-premium if you consider that it raised the range and priced above that range.  With ties to Steve Wozniak, co-founder of Apple Inc. (NASDAQ: AAPL), the interest was there. Because of the infinite storage and cloud interest this is one company that investors and traders will likely be keeping their eyes on.

Some investors may think of Fusion-io as cloud storage and some may consider it local storage.  Imagine the thought of combining the best aspects of each Western Digital Corporation (NYSE: WDC), Akamai Technologies Inc. (NYSE: AKAM), SanDisk Corporation (NASDAQ: SNDK) and EMC Corporation (NYSE: EMC) all in one place.  The buzzword term in technology of 2008 was ‘virtualization.’  Now the term is ‘data decentralization.’

The company calls itself “a leading provider of data-centric computing solutions – a combination of hardware and software that places data closer to processing, resulting in dramatic improvements in both performance and efficiency.”  The way we think of this company is a business which brings the cloud much closer.  We would also note that the company has tried to avoid the term “cloud” in its business as the real aim looks to be consolidated systems within data centers.

Initially anticipated to price in the $13 to $15 range, popularity of the offering pushed the anticipated range to $16 to $18.  After a still higher pre-opening price of $19, the first trade on FIO came in at an eye-catching $25.50.  FIO’s first day trading range was $21.19 to $29.65, settling at a closing price of $22.50 on active trading volume.

Indications were pointing to a pre-opening price of $22.25 to $22.50, but shares are now trading above $22.60 right after the open.  Fusion-io’s market capitalization is about $1.7 billion based on a market price of $22.50 and some 77,809,000 shares outstanding.

Revenues are growing: $648,000 in 2008; $10.15 million in 2009; and $36.216 million in 2010 (june Year-end).  Net losses were rising but the company appears near that critical mass level now.  Income was -$9.975 million in 2008; -$25.573 million in 2009; and -$31.716 million in 2010.  Its fiscal year ends in June, so the numbers are still showing growth: the first nine-months during the fiscal 2010 were $25.29 million with a loss at -$19.8 million versus 2011′s first nine-month reading of $125.51 million in sales and -$1.209 million as a loss.

New Enterprise Associates 12, owns about 38.8% of Fusion-io and Lightspeed Venture Partners VIII owns about 13.2% of the company. We’d be inclined to call this just a cloud storage player, but it is both hardware and external.

Underwriters for the public offering were Goldman Sachs, Morgan Stanley, J.P. Morgan, and Credit Suisse.  It is probably safe to assume that the 15% overallotment shares were subscribed.

JON C. OGG

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