Engenio Might Wait on IPO

With its parent company joining the raft of storage vendors checking in with disappointing quarterly earnings, Engenio Information Technologies Inc.'s already overdue IPO could slip a few more months.

LSI Logic Corp. (NYSE: LSI) originally said it planned to complete an IPO for its storage division --- renamed Engenio in the first half of this year (see LSI's Storage Sub Plans IPO and LSI Storage Becomes Engenio). Now sources don’t expect the IPO much before August, and at least one analyst says Engenio might not go public until after the summer. Still, Engenio continues to file the paper work that suggests the IPO will happen sooner rather than later.

LSI Logic says it expects to report revenue of around $448 million for the quarter that ended in June. That’s down from its previous forecast of $455 million to $470 million. It still expects earnings per share between $0.06 and $0.08. First Call projected revenues of $463 million and earnings of $0.07 for LSI Logic.

In a research note today, RBC Capital Markets analyst Thomas Curlin wrote that he doubts Engenio would go public this summer. Curlin cited LSI’s “revenue miss and the recent complexities of the storage sector,” as well as a possible OEM deal with Sun Microsystems Inc. (Nasdaq: SUNW) that could require LSI to disclose the terms before an IPO, thus delaying its offer date.

Engenio might also be reluctant to go public so soon after a rival drew a tepid response to its June 24 IPO (see Xyratex Swims in Public Pool). Xyratex Ltd. (Nasdaq: XRTX) shot for a share price of $15 to $17 but opened at $14, and the stock price was down to $11 at noon today.Engenio today filed a form with the SEC saying it plans to issue 12.5 million shares at an anticipated price between $8.00 and $10.00 per share. The document states that Engenio expects revenues for the quarter just ended to fall in the range of $112.5 million to $113.3 million. Engenio said its revenue for the quarter that ended in March was $115.8 million with a net income of $6.9 million.

The quarter that ended in June was rough on storage companies, as well as other technology vendors. Storage software vendors Veritas Software Corp. (Nasdaq: VRTS) and BakBone Software Inc. (Toronto: BKB), tape library vendors Storage Technology Corp. (StorageTek) (NYSE: STK) and Overland Storage Inc. (Nasdaq: OVRL), HBA company Emulex Corp. (NYSE: ELX), and hard drive company Maxtor Corp. (NYSE: MXO) have warned that they will miss their previous revenue forecasts. (See Veritas Takes a Dive, StorageTek Sings Sad Song, Emulex Hits the Deck, Overland Guides Under, Maxtor Cuts Heads, Guidance, and Another Reason to Hate Compliance.)

— Dave Raffo, Senior Editor, Byte and Switch