Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

CommVault's One Step Closer

CommVault, whose IPO has been expected for months, has issued a prospectus, a signal that it could launch itself as a public company anytime now.

According to its SEC filing, CommVault wants to list its common stock on the Nasdaq at a price between $12.50 and $14.50 per share. The company's symbol will be CVLT.

CommVault intends to raise $74.7 million by selling 6,148,148 shares of common stock at about $13.50 per share. A concurrent private placement of securities, which includes the offer of 102,640 shares of common stock offered at the same price to existing stockholders (including, incidentally, ex-Brocade CEO Greg Reyes), will bring in about $1.4 million more. In addition, CommVault plans to borrow $15 million more under a new term loan and reach into its cash and cash equivalents for $10.7 million.

All these proceeds will be shoveled into paying $101.8 million on the company's preferred stock as it is converted in common stock.

The situation makes this IPO decidedly lacklustre, especially given that back in March, some expected CommVault to raise more. (See CommVault's Taking the Plunge.) Also, the prospectus cites a number of troubling risk factors, including:

  • Dilution: Since the IPO share price will be higher than the "book value" of the shares right after the offering (which means the value based on a calculation involving assets, liabilities, number of shares, and other factors), buyers will see their shares lose value initially. Of course, the hope is that things won't stay that way.
  • An accounting flaw: As of March 31, 2006, CommVault's independent auditors found a "material weakness" in the way the company keeps its financial records. Despite having fixed "the identified material weakness related to our revenue recognition procedures," there's still a chance CommVault could wind up with reporting problems at the SEC. We know what that means.
  • Profitability is recent, really recent: CommVault's SEC filing indicates that the company only became profitable within fiscal 2006, and its obligatory risk statement indicates that "we may be unable to sustain future profitability."
  • 1