Violin Memory IPO Slumps with Tech Sector

Flash memory array maker Violin Memory Inc. (NASDAQ: VMEM) sold 18 million shares at $9 apiece Friday morning in an initial public offering (IPO) that raised net proceeds of around $147 million. The IPO priced at the middle of the expected range of $8 to $10. The underwriters have a 30-day option on 2.7 million additional shares.

Violin’s flash products are designed for high-speed I/O operations on data center servers and networks. The company competes with other makers like Fusion-io Inc. (NYSE: FIO), SanDisk Corp. (NASDAQ: SNDK) and some other real heavyweights like Intel Corp. (NASDAQ: INTC) and Micron Technology Inc. (NASDAQ: MU).

After today’s IPO, about 22% of Violin’s shares will be held publicly, not including the underwriters’ option. The firm expects to use the net proceeds for working capital and general corporate purposes, including expanding sales and marketing efforts, R&D investment and capital spending. All the shares offered in the IPO are new shares; no shares held by existing shareholders are included.

Shares are off to a rough start, trading down more than 16% in mid-morning at $7.59 after hitting a low of $7.16. That is likely a side effect of the downtrend in chip stocks today, with only Micron trading higher following a price target increase from Sterne Agee. Micron has posted a new 52-week high of $17.96 already this morning.

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