Contact: Brenon Daly
Even though many of the storage companies that went public over the past half-decade have subsequently been erased from the market through M&A, don’t look for CommVault to join that list. At least that’s the official word from the top of the company. CEO Robert Hammer said during his presentation at ThinkEquity’s Annual Growth Conference last week that the odds of his company getting acquired are ‘diminimous.’
CommVault is often mentioned as a takeover target, with Dell generally being viewed as the most likely buyer. Dell is CommVault’s largest OEM partner, accounting for a bit more than 20% of the company’s overall revenue. Dell has already purchased a half-dozen storage vendors, including EqualLogic and, most recently, Compellent Technologies. And now that Dell has punted its relationship with EMC, building up its own storage portfolio is a key mandate. (As one of the largest stand-alone backup software providers, CommVault competes primarily with Symantec, but also bumps up against EMC and IBM, among others.)
CEO Hammer says that rather than join the M&A parade, he’s planning to build CommVault into an independent company with sales of $1bn and an operating margin of 25%. That implies CommVault tripling revenue and more than doubling the operating margin. (One of the main reasons why CommVault runs at a relatively low 11% operating margin is because it spends more than half of its revenue on sales and marketing.) Hammer declined to set a timeframe for when the 11-year-old firm would hit those targets.
-by Thomas Rasmussen
It’s a somber 10-year anniversary for 10-Gigabit Ethernet vendor NetEffect. The company was picked up by Intel in a bankruptcy asset sale last week for a bargain $8m. Its technology, along with 30 of its engineers, will be rolled into Intel’s LAN Access Division. NetEffect has burned through some $50m in funding since recapitalizing in 2004. The company, which we once heralded as an innovator and potential leader in 10GigE technology, simply ran out of cash.
One reason for NetEffect’s scrap sale might be the increased competition. Big players like Intel, with its own organic offerings and its tuck-in of NetEffect, and Broadcom, with its $77m acquisition of Siliquent Technologies in 2005, have been crowding an already teeming market. This, coupled with scarce funding and lack of widespread adoption of the technology, makes us wonder what will happen to NetEffect’s surviving former rival startups still trying to stay afloat.
Venture capitalists have thrown hundreds of millions of dollars at 10GigE companies, with little to no payoff. We suspect the wind-down of NetEffect is an indication that VCs have had enough. Tehuti Networks, iVivity, Myricom, Neterion Technologies and Alacritech are some of the many startups in this sector that could potentially feel the net effect from this. In fact, iVivity seems to have quietly hit the switch already; its website is down and its phones are off the hook. Firms that will benefit from this include IBM, Hewlett-Packard, Dell and Hitachi, which are likely to follow Intel’s lead and peruse the bargain bin.
Known funding of select 10GigE players
||$25m series E (2008)
||$10m series D (2006)
||Missing in action
||$25m series B (2006)
||Acquired by Intel for $8m
||Acquired by Broadcom in 2005 for $77m
||$16m series D (2006)
||Acquired by Brocade Communications in 2007 for less than $10m*
||Series B (2008)
Source: The 451 M&A KnowledgeBase *Official 451 Group estimate