Investors seem to believe in the future of flash-based data storage product maker Fusion-io (News - Alert). The company’s shares rose by 17 percent after the company completed a major acquisition and released better than expected financial results for the first quarter of 2013.
So, what was the acquisition of? The company purchased NexGen, a company that provides storage area network (SAN) solutions that combine both traditional hard drive technology and flash-based storage.
Fusion-io reported revenue of $87.7 million for the first quarter, but a loss of three cents per share. The loss was still better than the seven cents per share loss analysts predicted.
"Many SME businesses have lean IT teams and budgets, making it critical to offer an integrated and affordable entry point for flash powered application acceleration that delivers consistent performance, even under demanding workloads like VDI and analytics," said David Flynn, Fusion-io CEO and chairman. "The hybrid NexGen solution combines memory attached flash and disk on leading server platforms to provide a system tuned to deliver performance, price and capacity. With this acquisition, we will maintain the current NexGen product model as we transition to supporting customers' preferred server platforms with our OEM partners."
Investors appeared to agree that the acquisition added to Fusion-io’s value as a company. “The move does indeed expand Fusion's total addressable market,” Edward Parker, an analyst with Lazard Capital Markets, wrote in a research note.
Revenue fell seven percent from the previous quarter, but it is important to note that revenue in this industry can be unpredictable from quarter to quarter. The company did however increase its guidance to $110 million for the fourth quarter, $2.5 million higher than analysts have predicted.
Fusion-io made the move to help provide better data storage hardware to its clients, which include Facebook, Hewlett-Packard, Dell and Apple, giving the company a competitive edge against its main rival EMC (News - Alert). The company will offer an upgrade path to all-flash data storage to current NexGen customers in the near future.
Edited by Jamie Epstein