3PAR, EqualLogic Lock Onto IPOs

<

Thin provisioning specialist 3PAR and iSCSI vendor EqualLogic are the latest storage players setting off down the public path, with both firms filing for IPOs in the last few days.

3PAR, which filed its S-1 with the Securities and Exchange Commission (SEC) yesterday, is looking to raise $100 million with its IPO. (See 3PAR Files Registration Statement.) EqualLogic, which submitted its S-1 late last week, is eyeing an offering worth $125 million.

Despite a somewhat uncertain economic climate, technology firms are falling over themselves to go public at the moment, as exemplified by VMware's headline-grabbing IPO yesterday. (See EqualLogic Adds Enhancements, , EqualLogic Supports Oracle 11g, and Riverbed, EqualLogic Team.)

Although unlikely to surge past the billion-dollar mark like VMware, 3PAR's move nonetheless underlines the storage sector's current obsession with public offerings. (See VMware IPO: A Storage Celebration, VMware Vaults on IPO, ONStor Secures $27M, Eyes IPO, and Storage Funding Finds Its Feet.)In addition to 3Par and EqualLogic, other vendors hitting this path include Double-Take, Voltaire, BladeLogic, and Data Domain. (See Double-Take, VMware Adjust Plans, Double-Take Prices Shares, Voltaire Strikes IPO, BladeLogic Announces IPO Pricing, and Data Domain Closes IPO.)

Goldman Sachs and Credit Suisse will act as joint book-running managers for 3PAR's IPO, with UBS acting as co-lead manager. Thomas Weisel Partners and RBC Capital Markets will act as co-managers.

3PAR's stock will be listed on either Nasdaq or the New York Stock Exchange, although the vendor has not yet priced its shares or decided on a ticker symbol.

The Fremont, Calif.-based firm nonetheless expects to raise $100 million from its IPO. This will be used largely for working capital, debt repayments, and future acquisitions, although 3PAR does not have "agreements or commitments for any specific acquisitions at this time."

3PAR is one of a number of vendors touting thin provisioning as a way for users to get the most out of their storage infrastructure. This ensures that physical disk capacity is only used as it is needed. (See Thin Is Definitely In, 3PAR Debuts 'Thin Provisioning', and A Data Reduction Dossier.)Other vendors that have already made moves into this space include Compellent, which recently filed its own S-1, LeftHand Networks, HP, EMC, HDS, and NetApp. (See Compellent Preps for IPO , LeftHand Adds 10-GigE SANs, LeftHand Secures $25M, VeriStor, Compellent Team Up, Hitachi Bulks Up, EMC's Thin Pickings, and Cardinal Uses CommVault, NetApp.)

This message appears to be getting through. 3PAR's revenues rose from $38.2 million in 2006 to $66.2 million in 2007. The vendor's losses also narrowed, from $16.3 million in fiscal year 2006 to $15.5 million in 2007.

By the end of June, 3PAR had racked up over 200 customers, which include the FBI, Myspace, Dow Jones, and Credit Suisse.

Another vendor that has recently ramped up its thin provisioning efforts is EqualLogic, which made its own IPO filing late last week, and is looking to raise up to $125 million. (See EqualLogic: Thin Is In, 3PAR Debuts 'Thin Provisioning', and A Data Reduction Dossier.)

With Goldman Sachs and Credit Suisse as lead underwriters, EqualLogic has yet to price its shares, although the vendor confirmed that it will use the ticker 'EQLX' when it starts trading.EqualLogic has downplayed any IPO suggestions in months past, but its goals have clearly changed. With more and more big-name vendors jumping into the iSCSI market, EqualLogic's S-1 underlines the growing momentum behind the technology. (See iSCSI Gang Talks Big, 3Com: A New iSCSI Player?, EMC, NetApp Ready New Wares, HP Plans HW/SW Upgrades, and Networked Storage Up 24%.)

In spring 2006, EqualLogic had 950 customers, although this figure has grown to more than 2,500. The vendor's revenues have risen steadily, from $10.4 million in 2004 to $68.1 million last year. Over the same period, EqualLogic's losses have narrowed from $12.1 million to $0.5 million.

In the first three months of 2007, EqualLogic's revenues were $23.8 million and the firm recorded a net loss of $1.2 million.

EqualLogic's IPO may not be tied to as sexy a technology as virtualization, although its S-1 filing shows that iSCSI is fast carving out a place in the storage pantheon. (See FC vs iSCSI: Latest Round .)