“This morning, SanDisk (SNDK) announced it is buying enterprise flash storage company Fusion-io (FIO) for $11.25 per share in cash, or $1.1 billion, net of cash assumed,” Michael Comeau reports for Minyanville.
“This looks like a good deal for SanDisk, which has over $4 billion in net cash on its balance sheet,” Comeau writes. “As of Friday’s close, Fusion-io was trading at $9.28, 78% below its all-time high. The company has suffered from executive departures and a big slowdown in growth as major customers like Apple and Facebook reduced spending.”
“SanDisk had been beefing up its enterprise SSD offerings by buying companies like Pilant Technology, SMART Storage Systems, and FlashSoft, and Fusion-io’s expertise in the PCIe SSD market makes it a logical fit,” Comeau reports. “Fusion-io also brings a lot of OEM partnerships with companies like Cisco and IBM, and it still has a pretty impressive client list, selling to companies like Pandora, Zappos, Datalogix, Zendesk, and Rakuten.”
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“Fusion-io’s shares were up 23 percent at $11.45 on Monday, suggesting that some investors were expecting a higher offer for the company,” Sruthi Ramakrishnan reports for Reuters. “Summit Research Partners analyst Srini Nandury said Sandisk not only got Fusion-io cheap, it got some of the marquee customers other vendors lacked. Fusion-io’s customers include Apple and Facebook Inc, which is building out its next-generation data centers this year.”
“SanDisk’s SSD business has been growing at a scorching pace. Revenue from SSDs jumped 61 percent in the first quarter, accounting for 28 percent of revenue. The company expects the share of SSDs to grow to 40 percent of revenue by 2017,” Ramakrishnan reports. “Fusion-io is SanDisk’s fifth acquisition in the enterprise storage business, the most recent being its $307 million purchase of SMART Storage Systems last July.”
“Fusion-io, which employs Apple co-founder Steve Wozniak as its chief scientist, has reported a loss for five quarters in a row,” Ramakrishnan reports. “‘In terms of technology that Fusion-io has, it’s leading edge. It’s a question of someone being able to harness that… and drive it to profitability,’ Cross Research analyst Steven Fox said.”
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MacDailyNews Take: Here’s hoping Woz is set for a nice windfall!
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Apple co-founder Woz joins Fusion-io as Chief Scientist – February 6, 2009