CommVault: IPO or HP?

Whispers among technology and financial analysts have Hewlett-Packard Co. (NYSE: HPQ) considering an overture to CommVault Systems Inc., the backup software vendor generally considered the most attractive IPO candidate among storage companies (see Top Ten Private Companies: Summer 2005 and CommVault 'Well Positioned' for IPO).

At this point, CommVault is believed to be leaning toward an IPO probably early next year – because the price would be better. "They believe they can raise $500 million to $1 billion going public," says a source familiar with CommVault. "That's probably a bit steep for HP."

A financial analyst speculates that $600 million – roughly six times annual revenue – is a reasonable price for CommVault, but "$1 billion is waaaaaay too much."

Sources say CommVault has been profitable for at least two quarters, and many financial analysts we've talked with expect it to be the next storage company to go public – if such a thing ever happens again.

CommVault moved into first place as an IPO prospect after LSI Logic Corp. (NYSE: LSI) CEO Abhi Talwalkar earlier this month decided to keep Engenio as a division rather than spin it off (see LSI Logic Reshuffles).— Dave Raffo, Senior Editor, Byte and Switch