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Engenio IPO Hopes Revived

Rebound quarter rouses dormant IPO plans

A record revenue quarter and year for Engenio Information Technologies Inc. could put its IPO plans back on track.

Engenio, LSI Logic Corp.s (NYSE: LSI) storage subsystems subsidiary, bounced back after a dismal third quarter that relegated its 2004 plans of going public to the backburner (see LSI Stands By Storage).

But Engenio’s revenue last quarter grew 32 percent sequentially, from $97 million to $127 million. Annual revenue for 2004 rose to $452 million from $426 million in 2003. The subsidiary represented 30 percent of LSI Logic’s revenue for the quarter and 27 percent for the year.

All this may cause LSI Logic to pull its plans to spin Engenio into a public company. The IPO was targeted for last spring but got pushed back in July after underwriters priced shares and found them well below their target range (see Engenio Gets Cold Feet). Those plans fell dormant after both Engenio and LSI experienced a rocky third quarter.

So what will it take to revive hopes of going public? No LSI executive broached the IPO on the company’s earnings call yesterday, but one financial analyst says it will probably require at least another quarter to regain the confidence of investors.

“It was a really solid rebound, and puts the IPO back on track, but I don’t know if it’s enough time yet after a losing quarter,” says Steve Berg of Punk Ziegel & Co. “I think that the market would prefer they were more consistent, not as up and down.”

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