When Xyratex Ltd. (Nasdaq: XRTX) went public in late June, a bunch of storage companies appeared hot to follow (see Xyratex Swims in Public Pool). More than a month later, the U.K.-based subsystem vendor stands alone among storage companies to complete an IPO in 2004. It looks as if it'll remain that way at least until deep into the year.
Engenio Information Technologies Inc., which filed to go public before Xyratex did, last week pulled its IPO (see Engenio Gets Cold Feet). Blade server startup Egenera Inc. has also filed but has not yet priced shares (see Egenera Seeks IPO). At last two other storage companies, SAN systems vendor Xiotech Corp.
and storage backup-and-recovery software vendor CommVault Systems Inc., are believed to be waiting for market conditions to improve before filing IPOs (see CommVault 'Well Positioned' for IPO).
Not only storage companies are saying no to IPOs, though. At least seven other companies have pulled or postponed IPOs over the last two weeks, and Google appears ready to join the club (see Google IPO in Doubt).
Xyratexs IPO could have served as an early warning for those looking to follow. It priced its shares June 24 at $14, below its target of $15 to $17. The stock price has steadily dropped, trading at $8.82 today at midday.
Xyratex CEO Steve Barber says going public has had its benefits. Mainly, the IPO gave the company around $48 million to work with. That could make it easier for Xyratex to make acquisitions, as it did last year when it acquired ZT Automation. It also gives Xyratex more money for product development, which is key to making it competitive with the likes of Adaptec Inc. (Nasdaq: ADPT), Dot Hill Systems Corp. (Nasdaq: HILL), and Engenio for OEM business. Unlike its competitors, Xyratex gets all its revenue by selling to OEMs.