Benchmark (Hold): "We now believe FIO is required to significantly lower pricing for ioScale in order to attract hyperscale customers large enough to backfill maturing Apple/Facebook business." Fusion-io launched ioScale in January as a low-cost/high-density alternative to its mainstay ioDrive modules.
Benchmark is also worried about slumping margins, something it attributes to changing mix and rising NAND flash prices.
Benchmark and Stifel (downgrading to Hold) both raise questions about OEM channel conflict and competition. The former thinks LSI might be taking some of Fusion-io's Facebook sales. Raymond James uses the occasion to argue LSI is well-position to become the #2 player in the enterprise server flash module space.
Lazard is (kind of) among the defenders. "We don't see enough evidence that competition is marginalizing FIO ... We see revenue lumpiness and some executive missteps."
On the CC, management asserted order from newer Web/cloud customers (a group that includes Pandora, Alibaba, and Salesforce) will help spark a rebound. LinkedIn and a U.K. financial services firm were named as clients picked up in FQ4.