Fusion-io Inc. (FIO:US) plunged the most ever after replacing Chief Executive Officer David Flynn with Shane Robison, a former Hewlett-Packard Co. (HPQ:US) senior leader associated with a disastrous deal by his prior employer.
Flynn and co-founder Rick White resigned to pursue “investing activities,” though both will remain on the board and serve in advisory roles for 12 months, Fusion-io said in a statement. The shares tumbled 19 percent.
Robison, 59, takes the helm as Fusion-io, a maker of data-storage that counts Apple Inc. (AAPL:US) and Facebook Inc. among its biggest customers, is working to diversify with lower-priced products. Robison’s role guiding Hewlett-Packard’s 2011 purchase of Autonomy Corp., which resulted in an $8.8 billion writedown and allegations of accounting lapses, raises concerns about how well he can direct strategy for Fusion-io, according to Andrew Nowinski, an analyst at Piper Jaffray Cos.
“Shane Robison was in charge of M&A at HP when they made the Autonomy debacle,” Nowinski said in an interview. He has a neutral rating on the shares and an $18 target price. “He doesn’t necessarily have a good track record.”
Fusion-io’s stock fell to $14.60 at the close in New York, expanding the decline for this year to 36 percent. The Salt Lake City-based company sold shares at $19 apiece in an initial public offering in June 2011.
“People were fine with the current management team and they are not happy that these guys are leaving so suddenly,” Abhey Lamba, an analyst at Mizuho Securities USA Inc., said in an interview.
Fusion-io sells corporate storage computers based on flash memory, which is faster and more expensive than widely used magnetic disk drives. Last month, Fusion-io said it purchased NexGen Storage Inc. for $119 million in cash and stock to expand in lower-priced storage options, part of Flynn’s effort to expand its customer base.
In naming Robison, Fusion-io is gaining an executive who Hewlett-Packard CEO Meg Whitman holds responsible for the botched Autonomy transaction. She blamed ex-CEO Leo Apotheker and Robison for failing to vet the deal.
“The CEO at the time and the head of strategy who led this deal are both gone - Leo Apotheker and Shane Robison,” Whitman said when she disclosed the writedown last November.
Robison, a director at Fusion-io since December 2011, spent more than nine years at Hewlett-Packard as chief strategy and technology officer and executive vice president, joining via the company’s 2002 acquisition Compaq Computer Corp. His career in technology spans more than three decades, including seven years at Apple. He left Hewlett-Packard in October 2011, shortly after Whitman arrived.
While at Hewlett-Packard, Robison was tasked with expanding its software business to compete more effectively with International Business Machines Corp.
“Shane Robison is a very seasoned Silicon Valley veteran,” said Jeffrey Fidacaro, an analyst at Monness Crespi Hardt & Co. in New York. Yet software at Hewlett-Packard remains a small percentage of sales, and the company had trouble integrating some acquisitions, he said.
“He brings a mixed track record from his time at HP,” said Mark Moskowitz, an analyst at JPMorgan Chase & Co. He has a neutral rating on the shares and a $21 target price. “We do not think it is a good sign to see co-founders leaving so soon after going public.”
Robison said that the board determined the timing of his start as CEO was the best way to make an effective transition, with both Flynn and White remaining involved at the company.
“This is not about a problem with the company,” Robison said in an interview. “It isn’t about any bad behavior on the part of the founders. There’s no disagreement on strategy.”
A sale “is not my focus,” Robison said. “My focus is on growing the company and building on what we have. If somebody expresses interest, our board knows how to deal with that.”
Fusion-io “is in good shape,” Robison said, and he plans to enter new markets and expand internationally. The company’s flash-storage products, which can help business customers manage burgeoning data that’s moving through their computer networks, represent “an exciting growth opportunity.”
Robison will need to assuage investor concerns that the company is too reliant on Facebook and Apple, leaving the company vulnerable to spending decisions made by those two customers. Combined, the two companies account for about 55 percent of revenue, according to supply chain data compiled by Bloomberg.
Fusion-io reaffirmed its April forecast for an adjusted operating loss of approximately $5 million on revenue of about $110 million for the fiscal fourth-quarter, which ends in June.
“Today’s announcements are not related to any issues regarding the integrity of the company’s financial statements or accounting policies and practices,” Fusion-io said in the statement.
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