Egenera Waits on IPO

Blade server startup Egenera Inc. has pulled in an additional $45 million in funding to tide it over until it finally completes its much talked-about IPO.Horizon Technology Finance is providing Egenera with $15 million, and Silicon Valley Bank has extended the companys credit line from $10 million to $30 million.

Egenera hit the headlines last year when it filed a registration statement with the U.S. Securities and Exchange Commission (SEC) to trade its common stock on the Nasdaq under the symbol EGEN (see Egenera Seeks IPO).

In an era when tech sector IPOs are few and far between, Egenera’s decision to go public was big news, though the firm is now discovering why so few IT companies take the public route. “The tech IPO market is awful now,” Egenera’s CFO Tom Sheehan tells NDCF. “Our board is not interested in taking a company of our quality into a market that’s not very good.”

Preparing for an IPO in the era of Sarbanes-Oxley and often volatile market conditions is easier said than done, and very few firms are even attempting it at the moment (see IPOs Happen: Carl Russo Speaks and Fortinet Fires Up for IPO). Even the most eagerly anticipated tech sector IPO of recent years was not without its hiccups (see Google IPO in Doubt and Tech Cash Slashed? Learn From Google).

Certainly, a number of big-name technology vendors are feeling pain at the moment, as shown in reports from the likes of IBM Corp. (NYSE: IBM) and Foundry Networks Inc. (Nasdaq: FDRY). (See IBM Reports Q1 Results and Foundry Faces Tough Times.)Added to this, Egenera also faces the capricious nature of the market for public offerings. “It’s a very fickle market,” Sheehan says. “It seems the appetite that investors have for tech IPOs comes and goes.”

Sheehan confirms that Egenera still has its eye on going public, although the CFO was unable to say when this will happen. “I don’t have a crystal ball on the market,” he shrugs.

How does all this affect the company’s product roadmap? Back in February, the Marlborough, Mass.-based vendor promised an “aggressive” 2005, predicting strong revenue growth and a slew of new products and customers. Egenera also upgraded the virtualization software running on its blade servers (see Egenera Looks Beyond Blades).

This plan will continue, according to Sheehan, who added that the strategy had already been funded prior to the current round. On the customer front, the firm started 2004 with 20 customers and ended with 80, and Sheehan says this trend is continuing. Total customers are now close to 100, he adds.

Sheehan says the additional funding will help boost Egenera’s sales and marketing operations, as well as extending the firm’s global footprint, particularly in Germany. The firm currently has 120 sales and marketing staff amongst its workforce of 280 employees, although Sheehan was unable to predict exactly how much these figures will grow during the coming year.— James Rogers, Site Editor, Next-Gen Data Center Forum