Bloomberg News

Fusion-io Climbs After Pricing Shares Above Range in IPO

June 09, 2011

(Updates with closing shares in second paragraph.)

June 9 (Bloomberg) -- Fusion-io Inc., the maker of flash- memory technology for companies including Facebook Inc., surged on its first day of trading after pricing its shares above the proposed range in an initial public offering.

The stock, listed under the symbol FIO, rose $3.50, or 18 percent, to close at $22.50 in New York Stock Exchange composite trading. The Salt Lake City-based company raised $233.7 million in its IPO, selling 12.3 million shares for $19 each, according to a statement yesterday.

Fusion-io, founded in 2005, is one of at least four Internet or technology companies scheduled to price U.S. IPOs in the next two weeks, Bloomberg data show. The company, whose biggest client is Facebook, is benefitting from a shift among corporations to flash memory from traditional storage drives. Flash has no moving parts and can access data faster than disks.

“It must be the Facebook effect,” said Darren Fabric, a Chicago-based managing director at IPOX Capital Management LLC, which oversees about $2.5 billion and bought shares in the IPO. “Usually when you have concentrated revenues, it’s kind of high-risk, but if your largest customer is Facebook, people look at it as a positive.”

The company increased its IPO price range June 7 to $16 to $18 after previously asking as much as $15 a share. At today’s closing price, the company’s market value is $1.75 billion.

Facebook, Apple

Facebook, owner of the world’s biggest social network, accounted for 47 percent of Fusion-io’s revenue in the nine months ended March 31. Apple Inc. is also a customer, Fusion- io’s filing with the U.S. Securities and Exchange Commission said. Stephen Wozniak, a co-founder of Apple in 1976, is Fusion- io’s chief scientist.

Customers are “using this and saying it’s really changing the way they do business,” Chief Executive Officer David Flynn said in an interview today. The IPO “gives us the resources we need to continue our growth and accelerate that growth.”

Fusion-io has 1,500 customers, said Flynn, who pared his stake in the company to about 8 percent after the offering from 10 percent. The top shareholders are venture firms New Enterprise Associates and Lightspeed Venture Partners, according to the filing.

Fusion-io sold 10.8 million shares in the offering, while existing stockholders sold 1.54 million. Proceeds will be used to expand its sales force, develop new products and possibly buy or invest in technology or other assets, the IPO prospectus showed. Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co. and Credit Suisse Group AG managed the offering.

Tech Offerings

Taomee Holdings Ltd., the Shanghai-based operator of an entertainment website for children, slid 8.6 percent to $8.23 after raising $64.7 million in its U.S. IPO yesterday. The company sold 7.19 million American depositary receipts at $9 each after offering them for as much as $11, according to a statement.

Each of Taomee’s ADRs represents 20 ordinary shares of the company. The stock is listed on the NYSE under the ticker TAOM. Credit Suisse and Deutsche Bank AG led the Taomee offering.

Pandora Media Inc., the Internet-radio company, plans to raise as much as $123.2 million in an IPO next week that would value the company at as much as $1.3 billion, according to its SEC filing and data compiled by Bloomberg. Morgan Stanley, JPMorgan and Citigroup Inc. are leading the offering.

Bankrate Inc., the online provider of interest-rate information, seeks $320 million in an IPO next week that would return it to public ownership after a 2009 private equity takeover by Apax Partners LLP. Goldman Sachs and Bank of America Corp. are managing the deal.

--Editors: Elizabeth Wollman, Jillian Ward

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net. Tom Giles at tgiles5@bloomberg.net


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