History 2004: Xyratex, First Storage Company to Go Public in 18 Months

It should have been LSI Logic Storage Systems, now become Engenio Information Technologies. But the latter was beaten to the punch by one of its competitors, Xyratex, which became the first storage company to go public since Seagate Technology (which went public for the 2nd time in its history) in December 2002.

The operation was not as successful as originally expected, since the UK company hoped to sell 6.96 million shares at a price ranging from $15 to $17, attaining instead only $14, for a total final pull of $97.4 million. Later this month, the share price fell to $11.

This failure to appeal to the financial community is probably due to the company’s relatively unknown name, its low gross margins and the net loss of its last fiscal year.

In fact, it’s an old storage company, started in 1966 as a division of IBM to manufacture HDDs in a huge plant in Havant, England, and subsequently charged with the development of the SSA interface, which failed against FC.

The company then underwent an MBO in 1994, and now has 2 major business: enterprise RAIDs for NAS and SAN, with one OEM, NetApp, the largest of the company’s 100 or so customers, and a 3rd in process equipment for the manufacture of HDDs (testers, servo-writers, automation).

Its largest customers for the latter are Seagate and Western Digital.

Xyratex sold its flexible interconnect division to ADFlex in 1995 and acquired Peer Protocols and Zadian the following year. In February 2004, it bought ZT Automation, a company that develops disk media handling automation products. The manufacturer, which numbers 771 employees in 5 countries at last count, including 418 in Great Britain, is now incorporated in Hamilton, Bermuda, for tax purposes.

This article is an abstract of news published on issue 198 on July 2004 from the former paper version of Computer Data Storage Newsletter.