Compellent Conjures $144M IPO

SAN specialist Compellent joined the rapidly growing list of storage vendors taking the IPO plunge yesterday, surging past its initial pricing and prompting speculation about which vendors will be next to go public.

The hardware vendor was initially hoping to raise $81 million through its offering after pricing its shares at $13.50. Trading under the symbol "CML", this figure was soon surpassed, and the shares opened at $23.00 yesterday, closing at $24.00, almost double the target price.

The frenzy of trading in Compellent's shares pushed the value of the vendor's IPO up to the $144 million mark.

Although Compellent's offering did not blow out the doors in the style of VMware's recent blockbuster IPO, at least one analyst predicts that other vendors will soon be taking the plunge. "3Par and EqualLogic's [IPOs] will be very soon," says Scott Sweet, senior managing partner at the IPOBoutique, adding that the firms are likely to go public in early November.

"Both of these are considered even more premier deals than Compellent, based on their financials," explains the analyst, although he expects Compellent to reach profitability by early 2008.The SAN specialist touts its products as a lower-cost alternative to offerings from big-name vendors such as EMC, combining both Fibre Channel and iSCSI in the same system. The vendor, which added an integral "diskless" NAS to its block-based Storage Center SAN a few months ago, also competes against 3PAR, Xiotech, EqualLogic, and LeftHand Networks.

Compellent's S-1, which was filed earlier this year, reveals an upward trend in the vendor's revenues, which rose from just under $10 million in 2005 to $23.3 million in 2006. Revenues for the first quarter of 2007 were $8.9 million, compared to $3.3 million in the same period last year.

For the first six months of this year, Compellent's revenues were $20.9 million, up from $9.5 million in the first half of 2006, according to an amendment to the S-1 filed last month. The vendor's net loss in the first six months of 2007 was $4.1 million, compared to $3.4 million in the same period last year.

The initial S-1 described how the vendor plans to use its IPO proceeds to increase its channel partners and expand sales to both small-to-medium sized companies and large enterprise users.

After a lean spell during the last few years, the first 10 months of 2007 have been a busy time for storage-related IPOs. In addition to Compellent, VMware, EqualLogic, and 3Par, other vendors hitting the IPO trail include Double-Take, Voltaire, BladeLogic, Data Domain, and Netezza.In a recent Byte and Switch poll of CIOs and IT managers, only 3 percent of respondents said that, out of all the storage IPOs undertaken during the last 18 months, Compellent's would be the most successful, compared to almost 40 percent who voted in favor of VMware.

Isilon, which has recently suffered some financial difficulties, was cited by more than a quarter of respondents as potentially the least successful IPO of the last 18 months, followed by Voltaire and Compellent.

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