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Nexsan Hopes to Raise $55 Million in IPO This Week

After another one postponed in 2008

Will Nexsan Corp. be happy this time? After already trying an IPO in 2008 (for $80.5 million), it hopes to raise around $55 million this week in another one.

The company wants to sell 5 million shares for $10 to $12 each to be listed on NASDAQ under the symbol NXSN and expects proceeds to be about $46.1 million after expenses, to be used for working capital.
Market cap of Nexsan is $194.6 million. Incorporated in Delaware in November 2000, the firm received total investment of $40 million, including $11 million in 2007 and $17 million in 2003. The supplier of disk-based storage systems for the mid-tier market, now with 128 people, is profitable since 2009.

In the SEC filing we learned that in particular, Nexsan relies on Bell Micro to get HDDs, crucial components into its systems, and not directly from manufacturers. "Bell Microproducts generally obtains disk drives from Hitachi Global Storage Technologies, Seagate Technology LLC and Western Digital Corporation. In addition, we obtain our power supplies from BluTek Power, Inc. and our microprocessors from PMC-Sierra, Inc. and servers from Dell, Inc.", stated the company.

There was no IPO from storage firms since 2008 and we counted only 17 IPOs since eleven years. As Nexsan, GlassHouse Technologies is also currently trying to become public.

As a journalist in storage, we never put our money in shares of industry’s companies, but it’s a good or not a good reason to give our opinion. Nexsan has a large and excellent portfolio around midrange disk subsystems and we know since a long time CEO Philip Black who follows and knows very well the technology and the business. But – you were waiting for this word, no? – Nexsan, at a time deeply in the OEM market, finds it difficult with low margin or giants like EMC or HP having their own disk arrays, and consequently is now pushing the channel where they are plenty of competitors, U.S. ones like LSI, Dot Hill and many others, and more and more Taiwanese ones … and the Chinese are arriving. The difficulty for Nexsan will be in the future to prove the better quality of its complete and integrated technology to sell at sufficient prices to maintain its – recent – profitability.
Do you agree, Philip?

To read the SEC

   Financial Figures
       of Nexsan

     (in US $ million)

FY* Revenues  Net
 2006 42.8 (5.6)
 2007  49.8 (3.0)
 2008  62.7 (5.3)
 2009  60.9 3.5

* ending in December
(Source: Nexsan)

     IPO From Storage Companies

 Company Year  Proceeds
 3PAR 2007 95
 BakBone Software 2000  NA
 CommVault Systems 2006 161
 Compellent Technologies 2007  85
 Data Domain 2007  111
 Double-Take Software 2006  55
 FalconStor Software** 2001  NA
 Isilon Systems 2006  108
 McData 2000  350
 Mellanox Technologies 2007  102
 Netezza 2007  124
 Rackable Systems 2005  75
 Rackspace Hosting 2008  145
 Riverbed Technology 2006  96
 StorageNetworks 2000  260
 Voltaire 2007  47
 Xyratex 2004  48

* in US$ million
** became public (IPO) via Network Peripherals

(Source: StorageNewsletter)