BlueArc Still Hot for IPO

After $157 million in funding and four years of shipping NAS product, BlueArc Corp. executives are still predicting an IPO in the not-too-distant future (see BlueArc Wallows in $47M Haul).

Founder and CTO Geoff Barrall, who last spring said he thought the company could go public in the first quarter of 2005, says it remains a matter of when rather than if (see SAN Snacks From SNW).

BlueArc is headed toward a successful IPO,” Barrall asserts. “We remain very confident in an eventual public offering.”

BlueArc president Mike Gustafson is a bit more cautious, mindful of market conditions that have convinced IPO hopefuls such as Engenio Information Technologies Inc. to wait, even after filing papers (see Engenio Gets Cold Feet). “I don’t think we can talk about a specific timeframe, but we’re driving towards profitability with the intention of going public," he says.

And profitability, indeed, may be the key. These days, it's a lot easier for Wall Street to take profitable companies public. Bluearc won't say when it will break even.Another looming question: Insiders wonder if BlueArc can pick up enough market share to become more than a niche player. Playing in a high-end NAS space long dominated by Network Appliance Inc. (Nasdaq: NTAP) and EMC Corp. (NYSE: EMC), BlueArc has found homes in vertical markets such as media and entertainment and high-performance computing (see BlueArc on NBC's Olympic Team and BlueArc Says Hello to Hollywood). But even there, the competition is heating up with other specialty plays such as Isilon Systems, Avid Technology Inc. (Nasdaq: AVID), and Panasas Inc.

"If you are a startup trying to sell me a $100,000-plus product, I am not going to buy it," one financial analyst says. "What happened to Zambeel, Scale8, Cereva -- all makers of large, high-end storage arrays?"

Answer: They all went away (see Zambeel Znuffed Out, Scale8 Flatlines, and Cereva Is Cerover). To be fair, none of them gathered the sales traction that BlueArc appears to have.

BlueArc's management triumverate also bears watching as Gustafson settles into the president role he took over in June after leaving McData Corp. (Nasdaq: MCDTA). Gustafson, who headed McData's marketing, took over the BlueArc sales and marketing duties that Barrall and CEO Gianluca Rattazzi had handled (see BlueArc Names President and Gustafson Leads Exec Carousel).

Recent industy scuttle has it that Barrall's role in the day-to-day operations is being phased out, but he and Gustafson deny that."I’m CTO of Blue Arc, I’ve been CTO since the company was founded, and I’ll remain CTO of Blue Arc,” Barrall says. “My focus is primarily technical and strategic. I’m still working on that on a daily basis. We specifically were looking for somebody with Mike’s skills for marketing. I probably was doing more marketing than it makes sense for a CTO to do.”

However, Barrall is working on more than BlueArc's strategy these days. He's on the advisory boards of several companies, including Data Domain Inc. and Tacit Networks Inc. Although Barrall downplays his roles with those companies, a DataDomain executive says Barrall is working onsite a couple of days a week on product strategy.

And what about CEO Rattazzi? When Gustafson joined, BlueArc said Rattazzi would drive product development and strategy. That appears to overlap a bit with Barrall’s duties. But BlueArc executives say there’s room for all. Rattazzi is more involved with the financial end of the company, while Barrall is BlueArc’s public face as its frequent representative in dealings with the media and at industry shows (see CTOs Look Outside the Box).

“You’ll still see me at those events,” Barrall says, but adds, “You’ll also be seeing more of Mike as well.”

— Dave Raffo, Senior Editor, Byte and Switch0