Friday, 9 May 2008

Nexsan going public

I've been reading the Nexsan statement announcing their intention to go public. I don't know much about their products other than they sell high density storage systems. What intrigued me about reading the announcement is the amount of exposure to the internal operation of the business occurs when statements are made to SEC as part of a flotation.

For instance, Nexsan have never made a profit, although their losses are declining year on year. They list their competitors, including all the usual suspects like EMC, HDS and HP, but quote Dell and Equallogic (now Dell) at the beginning of the list; this gives you an idea of the position in the market they see themselves in.

Nexsan don't run a direct sales force; they rely on Kodak for their support arm; they are reliant on Bell Microproducts for their disk drives; they rely on three subcontractors to manufacture their equipment; they are reliant on channel partners to install products at client sites.

So if I invested, what exactly would I be getting? Well I guess IP is the key value and that's exactly what the company will be rated on the value of. The more Nexsan can reduce costs by removing the dependency on external suppliers and the more they can acquire and use their own IP, then the more chance the company has of reaching that profit goal.

Remember 3Par? They launched last November at $14 a share and are now trading at a more $8.37. I wouldn't be betting the kids' college fund just yet....

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