Violin Memory Inc. (NYSE:VMEM) a company which pioneers efficient memory based solutions to bring storage performance in line with high speed applications, servers, and networks is expecting to have its IPO on the 22nd of September. The following will explore the fundamentals of the company and whether or not it may be a strategic long-term investment. Based in Mountain View California, Violin Memory Inc. is focused on developing flash storage systems, which are capable of processing big data at the "speed of memory." At the end of last year, Violin Memory took more than 19% of the flash storage array market; making it the leader of the industry over companies such as: IBM (NYSE:IBM), EMC (NYSE:EMC), NetApp (NASDAQ:NTAP), and HDS (NASDAQ:HDS).
Violin Memory is entering the big data market at a key point in time. With the amount of data in our world exploding after the advent and integration of smart phones into global culture and the rise of Internet usage; the importance of being able to process, analyze, and sort through data sets in extremely small increments of time is becoming increasingly more important in the business world. As a testament to this, MGI recently came out with a detailed report of the exponential growth in data for the foreseeable future. In studying the usage of data in five prominent sectors, which ranged from healthcare and retail in the United States, to the public sector in Europe, MGI found that big data can have tremendous positive results if properly implemented. Research showed that a retailer utilizing big data analytics to its fullest could increase its operating margin by more than 60 percent. Additionally, with regards to the public sector, if US Healthcare were to utilize big data analytics creatively as a means of reducing US healthcare expenditure and driving efficiency and quality, estimates predict the sector could create more than $300 billion in value each year. However the area most lucrative for big data analytics and for Violin Memory as well is in extracting data from consumers.
Violin Memory has arguably the fastest products on the market for analyzing vast seas of data in small increments of time. One example is their Flash Memory Arrays, which can be used to extract information from consumers at all times and run analytics on that data to extract useful and actionable information about specific consumers. Up until rather recently, one of the largest barriers to big data has in fact, been its inability to run analytics on vast seas of information in close to real time. Violin's products not only overcome this barrier but also open up businesses to a myriad of potential ways to market to consumers and capture consumer surplus. The reason for this has to do with their products, which are capable of doing analytic operations fast enough to absorb information from consumers at hyper speeds. In layman's terms, with so many people constantly radiating data from their smart phone devices on a daily bases, this data can be intercepted by retailers with Violin's technology and used as a means to market to the said individuals. Though something similar to this occurs already via online marketing with search engines such as Google (NASDAQ:GOOG) the amount of variables placed into the analytical operations are limited, and therefore, the results are limited to the consumers as well. With Violin's software big data can be intercepted, sorted, and processed in a very small amount of time, thereby facilitating consumer surplus.
In terms of finances Violin Memory Inc. had a total revenue of $11.4 million in 2011, $53.9 in 2012, and $73.8 million in 2013. During those same respective years, the company had a net loss of $16.7 million, $44.8 million, and $109.1 million. However for the six months ending July 31st 2013 the company had total revenue of $51.3 million and a net loss of $59.2 million, which could be representative of the company widening its profit margin. In the same period ending on the 31st the company's total assets were $112,886,000 while their liabilities were $95,539,000. The company currently maintains memory-based storage solutions that have been implemented in over 250 enterprises across diverse end markers, which include financial services, government, Internet, media and entertainment as well as telecommunications. Violin Memory Inc. will be offering $207,000,000.00 with a share offering of 18,000,000. The company's shares are expected to be priced anywhere from $8.00-$10.00 per share.
Going forward the use of big data analytics will come to define corporate competition and growth in the near future. Companies with the ability to develop the correct operations for processing big data analytics will be those who capture the most value for their companies and from their consumers. That being said, Violin provides a necessary service amid the growth and development of Big Data analytics and being at the head of this developing technology makes them a worthwhile long-term investment, which may yield a very high return in years to come.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.